zhongliang holdings group company limited ......02 corpora 2019 about zhongliang zhongliang holdings...
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ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED中梁控股集團有限公司(於開曼群島註冊成立之有限公司)
(股份代號: 2772)
中期報告
中期報告2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED中梁控股集團有限公司(Incorporated in the Cayman Islands with limited liability)(Stock Code: 2772)
INTERIM REPORT
INT
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2019
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LDIN
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PA
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LIMIT
ED中梁控股集團有限公司
CONTENTSCorporate Profile
Corporate Information
Chairman’s Statement
Management Discussion and Analysis
Corporate Governance and Other Information
Report on Review of Interim Financial Information
Interim Condensed Consolidated Statements of
Profit or Loss and Other Comprehensive Income
Interim Condensed Consolidated Statements of
Financial Position
Interim Condensed Consolidated Statements of
Changes In Equity
Interim Condensed Consolidated Statements of
Cash Flows
Notes to Interim Condensed Consolidated Financial
Information
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02
CORPORATE PROFILE
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
ABOUT ZHONGLIANG
Zhongliang Holdings Group Company Limited (“Zhongliang” or the “Company” and together with its subsidiaries, the “Group”) was listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) (Stock Code: 2772.HK) on 16 July 2019 (the “Listing”), which marked an important milestone in the development of the Company. Zhongliang is principally engaged in real estate development in the People’s Republic of China (“PRC” or “China”), headquartered in Shanghai with a national footprint.
The Group strives to develop quality residential properties targeting first-time home purchasers, first-time home upgraders and second-time home upgraders. It is also engaged in the development, operation and management of commercial properties and hold a portion of such commercial properties for future investment purpose. The Group adopts a high-asset turnover development model and standardised real estate development process for developing the projects in the second-, third- and fourth-tier cities. As a result, the Group has well-established the “Zhongliang” brand name nationwide and ranked first among the top ten real estate developers in China in terms of growth rate in 2018 and development potential in 2019, respectively, recognised by China Real Estate Association and E-house China R&D Institute China Real Estate Appraisal Center.
As at 30 June 2019, the Group achieved a nationwide operating coverage and a strong presence in 139 cities in 23 provinces and municipalities across five strategic economic areas, namely, the Yangtze River Delta Economic Region, the Midwest China Economic Region, the Pan-Bohai Economic Rim, the Western Taiwan Straits Economic Zone and the Pearl River Delta Economic Zone. As at 30 June 2019, the Group had a product portfolio of 385 projects, including 281 projects developed by its subsidiaries and 104 projects developed by its joint ventures and associates, at various development stages. The Group had approximately 42.0 million sq.m. land bank attributable to it, of approximately 36.9 million sq.m. for projects developed by its subsidiaries and 5.1 million sq.m. for projects developed by its joint ventures and associates, respectively.
Looking forward, Zhongliang will continue its expansion strategies nationwide and strives to become a leading comprehensive real estate developer in China.
03
CORPORATE INFORMATION
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
REGISTERED OFFICECayman Corporate Centre27 Hospital RoadGeorge TownGrand Cayman KY1-9008Cayman Islands
HEADQUARTERS IN THE PRC20/F, No.3 Shanghai Convention & Exhibition Center of
International Sourcing 235 Yunling East RoadPutuo District, ShanghaiChina
PRINCIPAL PLACE OF BUSINESS IN HONG KONGSuite 1506, ICBC Tower3 Garden Road, CentralHong Kong
CAYMAN ISLANDS PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICEWalkers Corporate LimitedCayman Corporate Centre27 Hospital RoadGeorge TownGrand Cayman KY1-9008Cayman Islands
HONG KONG SHARE REGISTRARComputershare Hong Kong Investor Services LimitedShops 1712–1716, 17th FloorHopewell Centre183 Queen’s Road East, WanchaiHong Kong
PRINCIPAL BANKSChina Minsheng Bank Corp., Ltd. Wenzhou BranchPing An Bank Co., Ltd. Ningbo BranchChina Minsheng Bank Corp., Ltd. Ningbo BranchChina Minsheng Bank Corp., Ltd. Suzhou BranchBank of China (Hong Kong) LimitedStandard Chartered Bank (Hong Kong) Limited
WEBSITEwww.zldcgroup.com
STOCK CODE2772
BOARD OF DIRECTORSExecutive DirectorsMr. Yang Jian (Chairman)Mr. Huang Chunlei (Chief Executive Officer)Mr. Xu LiangqiongMr. Ling Xinyu
Independent Non-executive DirectorsMr. Wang KaiguoMr. Wu XiaoboMr. Au Yeung Po Fung
AUDIT COMMITTEEMr. Au Yeung Po Fung (Chairman)Mr. Wang KaiguoMr. Wu Xiaobo
REMUNERATION COMMITTEEMr. Wu Xiaobo (Chairman)Mr. Yang JianMr. Au Yeung Po Fung
NOMINATION COMMITTEEMr. Yang Jian (Chairman)Mr. Wang KaiguoMr. Wu Xiaobo
AUDITORErnst & YoungCertified Public Accountants22/F, CITIC Tower1 Tim Mei AvenueCentralHong Kong
COMPANY SECRETARYMr. Yeung Tak Yip
AUTHORISED REPRESENTATIVESMr. Xu LiangqiongMr. Yeung Tak Yip
COMPLIANCE ADVISORGuotai Junan Capital Limited
04
CHAIRMAN’S STATEMENT
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
Dear shareholders,
I am hereby pleased to present to you the business review of the Group for the six months ended 30 June 2019 and its outlook for the second half of 2019.
INTERIM DIVIDEND
On 22 August 2019, the board (the “Board”) of directors (the “Directors”, each the “Director”) of the Company resolved to declare the payment of an interim dividend (the “Interim Dividend”) of HK15.3 cents per share for the six months ended 30 June 2019, which is equivalent to RMB13.8 cents per share based on the average middle exchange rate of Renminbi (“RMB”) against Hong Kong dollars (“HK$”) as announced by the People’s Bank of China for the five business days prior to the date on which the dividend was declared. The dividend payout ratio is 40% of the core net profit excluding changes of fair value of investment properties and financial assets at fair value through profit or loss, foreign exchange gains/losses and listing expenses, net of deferred tax (the “core net profit”) attributable to the owners of the Company. Based on the total issued shares of the Company as at 22 August 2019, the interim dividend for the six months ended 30 June 2019 amounted to approximately HK$548.0 million (approximately RMB492.9 million).
INTERIM RESULTS
For the six months ended 30 June 2019, the Group achieved an aggregate of contracted sales of RMB63,673.0 million, representing an increase of 26.8% as compared to that of RMB50,233.0 million for the corresponding period in 2018. During the period, revenue recognised amounted to RMB20,556.6 million, representing an increase of 111.2% as compared to the corresponding period last year. Gross profit margin for the period decreased to 24.5% by 2.8 percentage points as compared to the corresponding period last year. Net profit attributable to owners of the Company for the period grew to RMB1,204.1 million by 81.8% from that of RMB662.5 million for the corresponding period in 2018. The Group’s core net profit attributable to the owners of the Company for the period grew to RMB1,232.2 million, representing an increase of 88.4% from RMB654.2 million in the corresponding period last year.
REVIEW FOR THE FIRST HALF OF 2019
Market review
In the first half of 2019, the global economic landscape was complicated and volatile. The financial market fluctuated amid the Sino-US trade dispute. Nevertheless, China’s economy remained relatively stable during the period under the support of the government’s stimulus policy. As real estate is an important pillar industry of the economy of China, priority has been given to its stability this year onwards. Although the government implemented both tightened and relaxed policies, the real estate industry developed steadily in general.
To address the industry situation in the first half of 2019, the Group pursued the principles of “facing challenges, optimising the business model, opening up capital markets and maintaining steady growth” since the beginning of the year. As a result, the Group achieved contracted sales of RMB63,673.0 million for the period and was ranked as one of the top 20 national real estate enterprises in China.
During the six months ended 30 June 2019, the Group adhered to the philosophy of brilliant real estate investment and strictly adopted a full-coverage and full-structure development approach. To achieve this, the Group has been improving the management model of its Amoeba Ecosystem by consolidating its organisation, optimising its structure and seeking breakthroughs in innovation in order to strengthen its capability in business management.
05ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
CHAIRMAN’S STATEMENT
On 16 July 2019, Zhongliang was successfully listed on the Main Board of the Stock Exchange, marking a key milestone in the development of the Group.
Setting full-coverage and full-structure layout
The Group is strongly committed to setting a full-structure layout and solidifying its national footprint by adopting a two-pronged approach of vertical and horizontal development at the core of lands in the PRC. During the first half of 2019, the Group acquired 70 new projects, with an average cost of land parcel acquired of RMB3,934 per sq.m. Most of them were acquired through bidding, auction and listing in the open market. The aggregate land consideration attributable to the Group for the period was RMB25.2 billion. During the six months ended 30 June 2019, the Group entered into 18 new cities in China. As at 30 June 2019, the Group had a presence in a total of 23 provinces and 139 cities. These land-banking efforts demonstrate that the Group has made a further step towards a full-structure layout across China in the first half of 2019.
Optimising financial structure and enhancing financing capability
Since the second quarter of 2019, the financing market has tightened up significantly for real estate developers in China with more restriction in their financing channels. As always, maintaining a sound financial position serves an objective of development of the Group. On 16 July 2019, Zhongliang was officially listed on the Main Board of the Stock Exchange, raising proceeds of HK$3.2 billion including the exercise of the over-allotment options. This signifies that the Group has successfully kicked off a new journey by entering into the international funding market, and will enhance its financing capability in a steady manner.
On 8 August 2019, the Company was assigned a credit rating of B+ with a stable outlook by Fitch Ratings, a credit rating of B1 with a stable outlook by Moody’s Investors Service, and a credit rating of B+ with a stable outlook by S&P Global Ratings.
The Group has achieved significant improvement in terms of its key financial ratios. Specifically, the Group’s total equity increased from RMB6,754.2 million as at 31 December 2018 to RMB9,387.6 million as at 30 June 2019 primarily due to the profits generated by the Group during the period, resulting in the improvement in net gearing ratio from 58.1% as at 31 December 2018 to 43.5% as at 30 June 2019, which fell to the lower end of the industry range as compared to other real estate enterprises with a market capitalisation of hundreds of billions.
Upholding people-oriented principle and continuously optimising organisational structure
The Group regards its people as its most valuable assets. Also, to achieve high-quality business growth, the Group endeavours to optimise its organisational structure. In particular, the Group provides continuous staff training with an attempt to give support to high-calibre staff members by organising talent training programs such as new blood training program, as well as to better manage and foster its key staff members. In addition, the Group will engage a third-party consulting agency to help further enhance and deepen the job scope of all organisational levels, optimise the accountability system, appropriately delegate authority and increase the operating flexibility.
06 ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
CHAIRMAN’S STATEMENT
OUTLOOK FOR THE SECOND HALF OF 2019
Looking forward to the second half of 2019, the implementation of the real estate policy on a city-by-city basis is turning the market into segregation. As the existing restriction to real estate financing channels is expected to remain in force for a period of time, challenges will continue to persist in the real estate industry. On the fundamental of maintaining stability, the Group will adhere to its robust operation approach and continue to seek for decent growth with quality and low risk exposure.
Being one of the top 20 national leading real estate developers in China, Zhongliang has land bank nationwide and adopts a business strategy which ensures high operation efficiency. Despite the current challenging real estate market environment, the Group remains confident of keeping a sizable growth. In the second half of 2019, the Group will strive to make a breakthrough in structure, optimise the organisation, and manage its risk exposure by taking practical and effective measures. The Group will also enhance its operation with emphasis on full-cycle orientation, full-structure layout and full-structure business model.
As for the sales performance, the Group will take active steps to boost sales in order to deliver better sales results in the second half of the year. In 2019, the Group aims to reach an annual contracted sales target of RMB130 billion. Meanwhile, the Group will continue to strengthen cash flow management by focusing on the cash collection and maintaining adequate liquidity, so as to get well-prepared for any potential volatility in the market.
The Group will optimise its capital structure by exploring different financing channels in an active manner, such that it will be able to grasp and capture the opportunities for development.
APPRECIATION
Lastly, on behalf of my fellow members of the Board, I would like to express my sincere gratitude to all shareholders for their support to the Company, and to my colleagues at all levels for their dedication and hard work. The Group will remain focused on its mission of “creating value together to enjoy the bloom of every season”. In the course of creating value together, the Group will observe the rules, embrace any changes, consolidate its resources and achieve its goals with wholehearted passion and positive energy.
Yang JianChairmanHong Kong, 22 August 2019
07
MANAGEMENT DISCUSSION AND ANALYSIS
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
PERFORMANCE HIGHLIGHTS
For the six months ended 30 June Change in
percentage2019 2018
Contracted sales(Note 1)
Contracted sales (RMB’000)(Note 1) 63,672,966 50,233,005 +26.8%Contracted gross floor area (“GFA”) sold (sq.m.) 6,026,924 4,682,593 +28.7%Contracted average selling price (“ASP”) (RMB/sq.m.) 10,565 10,728 —1.5%
Selected financial informationRevenue (RMB’000) 20,556,565 9,731,168 +111.2%Gross profit (RMB’000) 5,034,506 2,660,306 +89.2%Profit for the period attributable to owners of the Company (RMB’000) 1,204,108 662,461 +81.8%Core net profit attributable to the owners of
the Company (RMB’000)(Note 2) 1,232,223 654,204 +88.4%Gross profit margin (%)(Note 3) 24.5 27.3Core net profit margin (%)(Note 4) 6.0 6.7Earnings per share (basic) (RMB cents) 40 22Core earnings per share (basic) (RMB cents) 41 22
As at30 June
2019
As at31 December
2018Change in
percentage
Total assets (RMB’000) 197,690,558 168,074,616 +17.6%Bank balances and cash (RMB’000)(Note 5) 24,721,435 23,080,364 +7.1%Total indebtedness (RMB’000)(Note 6) 28,802,200 27,004,917 +6.7%Total equity (RMB’000) 9,387,589 6,754,232 +39.0%Equity attributable to owners of the Company (RMB’000) 3,873,416 2,578,676 +50.2%Net gearing ratio (%)(Note 7) 43.5 58.1Weighted average cost of indebtedness (%)(Note 8) 10.0 9.9
Notes:
(1) Contracted sales include contracted sales by the Group’s subsidiaries, joint ventures and associated companies. Contracted sales data is unaudited and
is based on internal information of the Group. Contracted sales data may be subject to various uncertainties during the process of collating such sales
information and is provided for investors’ reference only.
(2) Core net profit represents the net profit excluding changes of fair value of investment properties and financial assets at fair value through profit or loss,
foreign exchange gains/losses and listing expenses, net of deferred tax.
(3) The calculation of gross profit margin is based on gross profit for the period divided by revenue for the period and multiplied by 100%.
(4) The calculation of core net profit margin is based on core net profit attributable to the owners of the Company for the period divided by revenue for the
period and multiplied by 100%.
08 ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
(5) Bank balances and cash comprises restricted cash, pledged deposits and cash and cash equivalents.
(6) Total indebtedness represents total interest-bearing bank and other borrowings.
(7) The calculation of net gearing ratio is based on total indebtedness less bank balances and cash divided by total equity at the end of the period and
multiplied by 100%.
(8) Weighted average cost of indebtedness is the weighted average of interest costs of all indebtedness outstanding as at the end of each financial period.
SUMMARY OF PROPERTY DEVELOPMENT
Contracted sales
During the six months ended 30 June 2019, the Group achieved contracted sales of RMB63,673.0 million, of which RMB40,319.1 million was contributed by its subsidiaries and RMB23,353.9 million was contributed by its joint ventures and associates. The Group’s contracted sales increased by approximately 26.8% from RMB50,233.0 million for the six months ended 30 June 2018 to RMB63,673.0 million for the six months ended 30 June 2019, which was primarily due to the Group’s abundant and diversified saleable resources across different regions, in particular in the Pearl River Delta Economic Zone, Pan-Bohai Economic Rim and Midwest China Economic Region. Contracted sales is defined as the total contractual value of properties that are contracted for pre-sale and sale in a given period, which is not equivalent to the revenue in the relevant period and shall not be deemed as an indication for the revenue to be recognised in any future period.
The following table sets forth a summary of the contracted sales by city for the six months ended 30 June 2019:
Contracted sales
% of totalcontracted
salesContracted
GFAContracted
ASP(RMB’000) (%) (sq.m.) (RMB/sq.m.)
Wenzhou 5,830,049 9.2 386,521 15,083Taizhou 3,843,819 6.1 210,891 18,227Jinhua 3,842,511 6.0 272,945 14,078Lishui 3,385,653 5.3 185,689 18,233Hangzhou 2,708,564 4.3 139,924 19,357Chongqing 1,897,309 3.0 254,689 7,450Xuzhou 1,832,679 2.9 214,580 8,541Quanzhou 1,651,052 2.6 262,895 6,280Wuxi 1,506,828 2.4 118,440 12,722Hefei 1,417,198 2.2 124,063 11,423Sanming 1,390,621 2.2 168,858 8,235Huzhou 1,307,991 2.1 88,371 14,801Ningbo 1,278,302 2.0 130,912 9,765Ningde 1,014,063 1.6 82,922 12,229Shangrao 971,826 1.5 66,843 14,539Wuhu 961,118 1.5 126,577 7,593Changzhou 940,793 1.5 88,784 10,596Kunming 898,815 1.4 100,038 8,985
09ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
Contracted sales
% of totalcontracted
salesContracted
GFAContracted
ASP(RMB’000) (%) (sq.m.) (RMB/sq.m.)
Nantong 867,322 1.4 83,171 10,428Zibo 819,408 1.3 86,255 9,500Anqing 811,552 1.3 71,124 11,410Yiyang 806,477 1.3 96,084 8,393Ganzhou 785,707 1.2 104,455 7,522Laiwu 777,350 1.2 104,899 7,410Xuchang 743,512 1.2 69,053 10,767Zhangzhou 709,389 1.1 44,629 15,895Zhoushan 690,068 1.1 65,117 10,597Zhaotong 629,239 1.0 80,737 7,794Baotou 602,099 0.9 70,921 8,490Baoshan 574,788 0.9 85,710 6,706Guigang 557,638 0.9 74,684 7,467Dali 547,917 0.9 40,616 13,490Ezhou 466,686 0.7 60,041 7,773Dezhou 451,317 0.7 41,975 10,752Lianyungang 446,949 0.7 58,116 7,691Shangqiu 438,457 0.7 68,378 6,412Yantai 417,168 0.7 39,960 10,440Yinchuan 411,378 0.6 40,873 10,065Fuzhou 409,128 0.6 41,360 9,892Qingdao 408,234 0.6 43,891 9,301Linfen 405,266 0.6 30,716 13,194Bozhou 400,399 0.6 52,153 7,677Maoming 395,274 0.6 38,992 10,137Ji’an 373,837 0.6 43,791 8,537Ankang 372,841 0.6 55,453 6,724Shenyang 372,670 0.6 35,911 10,378Xinyang 370,238 0.6 45,100 8,209Linyi 368,492 0.6 20,045 18,383Liuzhou 366,073 0.6 37,374 9,795Yancheng 358,642 0.6 41,848 8,570
10 ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
Contracted sales
% of totalcontracted
salesContracted
GFAContracted
ASP(RMB’000) (%) (sq.m.) (RMB/sq.m.)
Jiaxing 347,291 0.5 19,080 18,202Changsha 318,805 0.5 45,572 6,996Zhuzhou 316,646 0.5 31,472 10,061Shaoyang 309,273 0.5 58,486 5,288Mianyang 304,749 0.5 43,159 7,061Jining 302,741 0.5 42,572 7,111Nanchong 301,407 0.5 32,488 9,277Liaocheng 297,497 0.5 27,368 10,870Quzhou 287,651 0.5 14,122 20,369Lu’an 266,947 0.4 32,645 8,177Changde 265,895 0.4 47,155 5,639Yangzhou 264,713 0.4 26,109 10,139Suqian 257,231 0.4 30,405 8,460Pingdingshan 253,054 0.4 25,036 10,108Enshi 237,040 0.4 25,152 9,424Huaibei 222,619 0.3 34,142 6,520Qinzhou 219,959 0.3 39,180 5,614Hohhot 214,852 0.3 23,038 9,326Suizhou 207,533 0.3 24,179 8,583Pingxiang 195,763 0.3 16,689 11,730Tongchuan 193,048 0.3 20,953 9,213Zaozhuang 188,715 0.3 20,322 9,286Puyang 188,329 0.3 21,715 8,673Puer 179,576 0.3 14,268 12,586Taizhou 175,163 0.3 15,757 11,117Binzhou 174,738 0.3 24,261 7,202Jiangmen 163,913 0.3 12,484 13,130Shaoguan 158,455 0.2 22,198 7,138Chizhou 158,094 0.2 16,431 9,622Jiyuan 157,827 0.2 6,969 22,647Dazhou 154,793 0.2 21,466 7,211Jiaozuo 147,612 0.2 24,697 5,977
11ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
Contracted sales
% of totalcontracted
salesContracted
GFAContracted
ASP(RMB’000) (%) (sq.m.) (RMB/sq.m.)
Tangshan 137,519 0.2 15,828 8,688Jiujiang 136,105 0.2 14,150 9,619Foshan 135,828 0.2 15,214 8,928Pingliang 133,357 0.2 19,805 6,734Suzhou 128,877 0.2 9,197 14,013Nanning 127,410 0.2 10,554 12,072Jieyang 119,167 0.2 12,765 9,335Shaoxing 113,182 0.2 12,263 9,230Loudi 108,738 0.2 13,536 8,033Chifeng 107,413 0.2 13,501 7,956Zhaoqing 97,584 0.2 15,292 6,381Bijie 97,492 0.2 15,970 6,105Meishan 95,514 0.2 10,199 9,365Suzhou 94,694 0.1 9,063 10,448Tianshui 92,655 0.1 8,322 11,134Chaozhou 91,646 0.1 16,228 5,647Chengdu 90,956 0.1 4,819 18,874Tongling 89,992 0.1 15,179 5,929Xuancheng 84,403 0.1 8,490 9,941Xinyi 62,333 0.1 2,598 23,993Yueyang 56,264 0.1 6,689 8,411Yuxi 46,776 0.1 4,595 10,180Jingdezhen 38,857 0.1 4,548 8,544Luoyang 38,258 0.1 3,206 11,933Hengyang 28,155 * 3,901 7,217Yichang 23,943 * 1,508 15,877Fuzhou 21,670 * 1,744 12,425Taian 7,543 * 816 9,244
63,672,966 100.0 6,026,924 10,565
* Less than 0.1%
12 ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
The following table sets forth a summary of the contracted sales by region for the six months ended 30 June 2019:
Contracted sales
% of totalcontracted
salesContracted
GFAContracted
ASP(RMB’000) (%) (sq.m.) (RMB/sq.m.)
Yangtze River Delta Economic Region 34,983,627 55.0 2,704,707 12,934Midwest China Economic Region 15,106,062 23.7 1,832,057 8,245Pan-Bohai Economic Rim 4,723,392 7.4 504,103 9,370Western Taiwan Straits Economic Zone 7,698,018 12.1 852,884 9,026Pearl River Delta Economic Zone 1,161,867 1.8 133,173 8,724
63,672,966 100.0 6,026,924 10,565
The following table sets forth a summary of the contracted sales by tier of city for the six months ended 30 June 2019:
Contracted sales
% of totalcontracted
salesContracted
GFAContracted
ASP(RMB’000) (%) (sq.m.) (RMB/sq.m.)
Second-tier cities 16,984,017 26.7 1,404,531 12,092Third-tier cities 37,695,487 59.2 3,586,737 10,510Fourth-tier cities 8,993,462 14.1 1,035,656 8,684
63,672,966 100.0 6,026,924 10,565
Completed properties held for sale
Completed properties held for sale represents completed GFA remaining unrecognised at the end of each reporting period and are stated at the lower of cost and net realisable value. Cost of the completed properties held for sale refers to the related costs incurred attributable to the unsold properties.
As at 30 June 2019, the Group had 28 completed property projects and completed properties held for sale of RMB1,436.4 million, representing a decrease of 60.1% from RMB3,596.4 million as at 31 December 2018.
Projects under developmentProperties under development are intended to be held for sale after completion. Properties under development are stated at the lower of cost, which comprises land costs, construction costs, capitalised interests and other costs directly attributable to such properties incurred during the development period, and net realisable value. Upon completion, the properties are transferred to completed properties held for sale.
As at 30 June 2019, the Group had 214 projects under development and properties under development of RMB118,503.1 million, representing an increase of 19.1% from RMB99,481.4 million as at 31 December 2018.
13ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
Land bank
During the six months ended 30 June 2019, there were a total of 70 newly acquired land parcels with a total planned GFA of approximately 8.1 million sq.m. The average cost of land parcels acquired (excluding carparks) was approximately RMB3,934 per sq.m.. The following table sets forth the details of land parcels the Group acquired during the six months ended 30 June 2019:
City Project Intended primary useThe Group’s
equity interest Site area
Planned GFA (excluding carparks)
Attributable planned GFA
(excluding carparks)
Total consideration
Attributable consideration
Average land cost (excluding
carparks)(%) (sq.m.) (sq.m.) (sq.m.) (RMB) (RMB) (RMB/sq.m.)
1 Weifang Land parcel No.2018-089 in Qingzhou City, Weifang
Residential/Commercial 100 25,651 51,276 51,276 30,781,200 30,781,200 600
2 Jinhua A parcel of land located at the northeastern side of the intersection of Shangfo Road and Sitong Road in Shangxi Town, Yiwu City
Residential/Commercial 100 24,424 53,733 53,733 220,800,000 220,800,000 4,109
3 Mianyang Land parcel No.15 located at Ming Yue New City in Jiangyou City
Residential/Commercial 100 63,171 189,513 189,513 151,611,200 151,611,200 800
4 Quanzhou Land parcel No.06 located at Yuzhou Commercial Area in Nanxing District, Huian City
Residential/Commercial 40 26,195 68,107 27,243 158,000,000 63,200,000 2,320
5 Nanyang Land parcel No.2018-32 located at the western side of Qifeng Avenue, Fangcheng
Residential/Commercial 100 49,990 124,975 124,975 114,730,000 114,730,000 918
6 Hangzhou A parcel of residential land located at YH02 southern area of Future Science and Technology City
Residential/Commercial 100 26,094 28,703 28,703 391,090,000 391,090,000 13,625
7 Nanning Land parcel No.GC2018-137 located at Yongning District, Nanning City
Residential/Commercial 100 25,091 75,272 75,272 205,492,915 205,492,915 2,730
8 Taizhou Land parcel No.BXE036-0613 located at Yuhuan New City
Residential/Commercial 100 70,000 105,000 105,000 512,000,000 512,000,000 4,876
9 Dalian Land parcel No.0408 located at Jinzhou Bay of Jinzhou District, Dalian
Residential/Commercial 100 67,287 91,510 91,510 226,200,000 226,200,000 2,472
10 Lu’an Land parcel No.2019-3 located at the west of Lu’an City
Residential/Commercial 100 58,177 104,719 104,719 164,400,000 164,400,000 1,570
11 Nanchang A parcel of land with an area of 77.8mu located at the western side of Xuefu Road in the new city district of Anyi County, Nanchang
Residential/Commercial 100 51,893 103,786 103,786 291,300,000 291,300,000 2,807
12 Suqian Land parcel No. 2018 (Jin) D Suyu 08 in Suqian
Residential/Commercial 100 61,047 152,617 152,617 392,050,766 392,050,766 2,569
13 Changsha Land parcel No.[2019]001 in Changsha County, Changsha City
Residential/Commercial 100 87,316 165,900 165,900 337,080,000 337,080,000 2,032
14 Tianjin Land parcel No.2018-017 located at Dazhang Village, Beichen District, Tianjin
Residential/Commercial 60 62,087 103,133 61,880 445,760,000 267,456,000 4,322
15 Tianjin Land parcel No.2018-018 located at Dazhang Village, Beichen District, Tianjin
Residential/Commercial 60 54,988 89,311 53,587 345,000,000 207,000,000 3,863
16 Suining A parcel of land with an area of 24mu located at the Jingkai South District, Suining
Residential/Commercial 100 16,006 35,214 35,214 97,480,600 97,480,600 2,768
17 Suzhou A parcel of land located at the east of Xiangcheng Avenue and the south of Kangyuan Road in Suzhou
Residential/Commercial 100 47,434 104,355 104,355 1,411,900,000 1,411,900,000 13,530
18 Taizhou A parcel of land located at the southern side of Wangjiang Road in Binjiang New City, Jingjiang
Residential/Commercial 50 73,286 131,915 65,958 598,000,000 299,000,000 4,533
19 Hefei Land parcel No.CF201901 located at Gangji Village, Changfeng County
Residential/Commercial 100 69,271 124,687 124,687 675,415,000 675,415,000 5,417
20 Xi’an A project with an area of 153mu located at Liguang Street in Qinhan New City, Xixian New Area
Residential/Commercial 100 102,289 173,892 173,892 610,000,000 610,000,000 3,508
14 ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
City Project Intended primary useThe Group’s
equity interest Site area
Planned GFA (excluding carparks)
Attributable planned GFA
(excluding carparks)
Total consideration
Attributable consideration
Average land cost (excluding
carparks)(%) (sq.m.) (sq.m.) (sq.m.) (RMB) (RMB) (RMB/sq.m.)
21 Qingdao A parcel of land located at the east of Qingdao Road, Laixi City
Residential/Commercial 80 35,097 98,851 79,081 93,680,000 74,944,000 948
22 Chenzhou A parcel of land (Chen Tu Gua Gao Zi [2019] No.012) in Beihu District, Chenzhou City
Residential/Commercial 100 70,075 185,698 185,698 200,000,000 200,000,000 1,077
23 Cangzhou Land parcel No.GTP-2017-11 in High-tech Zone, Cangzhou City
Residential/Commercial 100 69,928 153,841 153,841 590,000,000 590,000,000 3,835
24 Hangzhou A parcel of land located at Kun Sheng Xiao Bang in Jiubao, Hangzhou
Residential/Commercial 34 62,475 16,382 5,570 347,300,000 118,082,000 21,200
25 Hefei Land parcel No.E1903 in Yaohai District, Hefei
Residential/Commercial 36 59,233 118,466 42,648 928,478,686 334,252,327 7,838
26 Chongqing Land parcel No.C-14-2/03 located at Zone C of Lijiatuo Division in Ba’nan District, Chongqing City
Residential/Commercial 100 7,391 14,782 14,782 89,500,000 89,500,000 6,055
27 Nanjing Land parcel No.2018G66 located at Shangfa Town in Jiangning District, Nanjing City
Residential/Commercial 30 24,217 60,544 18,163 730,000,000 219,000,000 12,057
28 Changzhou A parcel of land located at the northern side of Laodong Middle Road and the western side of Youyi Road in Tianning District, Changzhou City
Residential/Commercial 45 61,134 134,495 60,523 1,080,000,000 486,000,000 8,030
29 Yiyang A parcel of land (Yi Tu Wang Pai Zi [2019] No.07) in High-tech Zone, Yiyang City
Residential/Commercial 80 36,605 102,494 81,995 206,730,000 165,384,000 2,017
30 Guigang Land parcel No.2018G-109 in Qintang District, Guigang City
Residential/Commercial 100 46,461 92,921 92,921 83,880,000 83,880,000 903
31 Yantai A redevelopment project located at Beishangfang of Zhifu District, Yantai
Residential/Commercial 34 66,667 114,000 38,760 256,630,200 87,254,268 2,251
32 Jinhua A parcel of land located at the northern side of Xixi New City, Lanxi City
Residential/Commercial 54 40,850 81,700 44,118 287,580,000 155,293,200 3,520
33 Fuzhou A parcel of land located at Meixi New City, Minqing
Residential/Commercial 20 60,467 120,934 24,187 423,000,000 84,600,000 3,498
34 Chuxiong Land parcel No.2019-G-4-1&2 with an area of 112.96mu located at Dongnan New City, Chuxiong City
Residential/Commercial 100 75,309 263,582 263,582 301,989,090 301,989,090 1,146
35 Guiyang Land parcel No.G(19)014 located at Sanma Area of Yunyan District, Guiyang City
Residential/Commercial 100 27,663 69,158 69,158 493,041,000 493,041,000 7,129
36 Wenzhou A parcel of land (Yong Zhong YB-08-D15) in Yongqiang North Area, Longwan
Residential/Commercial 100 50,068 90,122 90,122 994,000,000 994,000,000 11,029
37 Fuyang Land parcel No.[2019]-7 in Yingquan District, Fuyang City
Residential/Commercial 100 198,625 407,659 407,659 1,101,512,400 1,101,512,400 2,702
38 Wenzhou Land parcel No.B-c1-2 in Binhai New Area, Yueqing City
Residential/Commercial 100 31,677 63,354 63,354 520,500,000 520,500,000 8,216
39 Chizhou Land parcel No. [2019]1 in Guichi District, Chizhou City
Residential/Commercial 100 99,532 159,251 159,251 495,000,000 495,000,000 3,108
40 Xinxiang Land parcel No.(2019)03-2 in Weihui, Xinxiang City
Residential/Commercial 100 33,016 82,374 82,374 91,680,000 91,680,000 1,113
41 Anqing Land parcel No.1901 located in the new city at the eastern part of Anqing City
Residential/Commercial 100 107,731 236,900 236,900 1,137,000,000 1,137,000,000 4,799
42 Fuzhou Land parcel No.2019 Pai-04 at the north of Fuqing City
Residential/Commercial 100 33,948 101,844 101,844 312,000,000 312,000,000 3,064
43 Fuzhou A parcel of land (Rong Gao Xin No. 2019-04) in High-tech Zone, Fuzhou City
Residential/Commercial 100 60,357 116,393 116,393 650,000,000 650,000,000 5,585
44 Wenzhou Land parcel No.C-c25 located at the central district of Yueqing City
Residential/Commercial 100 12,605 31,513 31,513 309,000,000 309,000,000 9,805
45 Hangzhou A parcel of land located at Xin An Jiang Street in Jiangde City, Hangzhou with a theatre erected thereon
Residential/Commercial 100 15,462 26,595 26,595 340,000,000 340,000,000 12,784
46 Quanzhou Land parcel No.P2018-38 located at the south of Chidian Town, Jinjiang City
Residential/Commercial 100 34,205 85,513 85,513 502,000,000 502,000,000 5,870
47 Nanchang Land parcel No.DAFJ2019005 located at the Hi-tech Zone in Qingshan Lake District, Nanchang City
Residential/Commercial 34 102,269 204,538 69,543 1,185,810,000 403,175,400 5,798
48 Sanming Land parcel No.2019P002 in Guixiyang Area, Sanming
Residential/Commercial 31 45,119 103,700 32,168 438,000,000 135,867,600 4,224
15ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
City Project Intended primary useThe Group’s
equity interest Site area
Planned GFA (excluding carparks)
Attributable planned GFA
(excluding carparks)
Total consideration
Attributable consideration
Average land cost (excluding
carparks)(%) (sq.m.) (sq.m.) (sq.m.) (RMB) (RMB) (RMB/sq.m.)
49 Xuancheng A parcel of land located at the southern side of Baida Shopping Centre in Chengnan Area, Guangde County
Residential/Commercial 100 69,872 125,770 125,770 388,808,000 388,808,000 3,091
50 Zigong Land parcel No.C-250-1 in Jianshe Road of Gongjing District, Zigong City
Residential/Commercial 100 26,634 39,951 39,951 63,919,300 63,919,300 1,600
51 Puer Land parcel No.P01138 in Simao District, Puer
Residential/Commercial 100 17,342 31,215 31,215 73,728,000 73,728,000 2,362
52 Xi’an Land parcel No.XXKG-DZ01-44 located at Konggang New City in Xixian, Xi’an City
Residential/Commercial 100 39,375 78,750 78,750 165,380,000 165,380,000 2,100
53 Weihai A parcel of land (Rong Zi Jing Gua Zi [2019] No.5) located in Rongcheng, Weihai City
Residential/Commercial 100 19,240 61,588 61,588 125,536,525 125,536,525 2,038
54 Loudi A parcel of land (Lou Tu Wang Gao Zi [2019] No.5) located in Louxing District, Loudi City
Residential/Commercial 100 38,989 136,461 136,461 181,180,000 181,180,000 1,328
55 Quanzhou Land parcel No.2018-22 in Jinjiang, Quanzhou
Residential/Commercial 15 126,062 317,298 47,722 487,000,000 73,244,800 1,535
56 Wuxi Project No. 2 located at Zhang Village in Huishan New City of Huishan District, Wuxi
Residential/Commercial 40 78,576 133,250 53,300 1,379,090,000 551,636,000 10,350
57 Shaoxing A parcel of land located at Daojiupan in City West, Shengzhou
Residential/Commercial 100 33,205 49,808 49,808 194,000,000 194,000,000 3,895
58 Jinhua Land parcel No.2 located at Jiangwan Organic Renewal Area in Economic and Technological Development Zone, Yiwu
Residential/Commercial 100 61,839 80,390 80,390 1,284,050,000 1,284,050,000 15,973
59 Beihai A parcel of land located at the northern side of Cultural and Sports Centre No.1 Road of Lianzhou Town, Hepu County, Beihai City
Residential/Commercial 100 39,312 137,592 137,592 152,000,000 152,000,000 1,105
60 Lishui A parcel of land located at the northwestern side of the intersection of Dongdi Road and Haoxi Road in City North Area, Lishui
Residential/Commercial 100 144,691 347,258 347,258 2,452,000,000 2,452,000,000 7,061
61 Jiyuan A parcel of land located at the east of Qinyuan Road and the northern side of Binhe North Street in Hi-tech Zone of Jiyuan City
Residential/Commercial 93 29,758 59,336 54,993 188,814,500 174,993,279 3,182
62 Suzhou A parcel of land located at Gutang Street, Taicang City District
Residential/Commercial 100 11,131 20,036 20,036 188,270,000 188,270,000 9,397
63 Xuancheng A parcel of land in Old City District of Ningguo City with an old factory of Sierte erected thereon
Residential/Commercial 39 70,000 126,000 48,523 246,749,580 95,023,263 1,958
64 Huangshi Land parcel No.WG(2019)14 in Huangshigang District, Huangshi City
Residential/Commercial 100 64,740 213,642 213,642 648,900,000 648,900,000 3,037
65 Cangzhou Land parcel No.65 in Huanghua Development Zone under the public transfer 2018
Residential/Commercial 100 48,224 96,448 96,448 290,000,000 290,000,000 3,007
66 Ezhou Land parcel No.WP(2019)003 in Gedian, Ezhou
Residential/Commercial 65 39,962 103,901 67,536 480,610,000 312,396,500 4,626
67 Wenzhou Land parcels No. 02-41, 03-05, 03-06, 03-10 and 03-11 located at Phase 2, Nanbinjiang, Jiangnan New District, Ruian City
Residential/Commercial 15 114,285 300,329 45,049 793,370,000 119,005,500 2,642
68 Jiujiang A parcel of land next to Liangxinjiayuan, Luliangxi Avenue, Liangtang New District, Xiushui County, Jiujiang City
Residential/Commercial 100 31,736 63,472 63,472 137,575,300 137,575,300 2,167
69 Yibin Land parcel No.TD-A-05-03 in Linjiang New District, Yibin City
Residential/Commercial 56 40,816 101,632 56,914 410,609,000 229,941,040 4,040
70 Huangshi Land parcel No.G18062 in Daye Residential/Commercial 100 38,605 96,513 96,513 105,900,000 105,900,000 1,097
3,814,277 8,135,861 6,525,007 32,004,893,262 25,151,430,473 3,934
As at 30 June 2019, the total land bank attributable to the Group, taken into account the total land bank of projects developed by subsidiaries, joint ventures and associates, was approximately 42.0 million sq.m., among which, approximately 1.5 million sq.m. were completed properties available for sale/leasable and approximately 40.5 million sq.m. were under development.
16 ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
The following table sets forth the breakdown of the total land bank attributable to the Group developed by the Group’s subsidiaries in terms of geographic location as at 30 June 2019:
Number of projects
Completed GFA available for
sale/leasable GFA(1) (sq.m.)
Planned GFA under
development (sq.m.)
Estimated GFA for future
development (sq.m.)
Total land bank attributable to
the Group(2) (sq.m.)
% of total land bank
attributable to the Group
Total land bank(3)
(sq.m.)
Yangtze River Delta Economic Region
Zhejiang Province 75 567,295 5,174,936 827,798 6,570,029 15.6% 6,570,029Jiangsu Province 36 150,442 4,702,045 498,881 5,351,368 12.7% 5,351,368Anhui Province 23 17,102 2,393,460 1,484,351 3,894,913 9.3% 3,894,913
Subtotal 134 734,839 12,270,441 2,811,030 15,816,310 37.6% 15,816,310
Midwest China Economic Region
Henan Province 19 — 2,439,823 454,993 2,894,816 6.9% 2,894,816Hunan Province 13 — 1,439,444 746,622 2,186,066 5.2% 2,186,066Yunnan Province 10 — 1,469,661 396,073 1,865,734 4.5% 1,865,734Hubei Province 6 — 673,338 489,073 1,162,411 2.8% 1,162,411Sichuan Province 9 — 800,296 297,865 1,098,161 2.6% 1,098,161Guangxi Zhuang Autonomous Region 7 — 727,089 258,203 985,292 2.3% 985,292Shaanxi Province 6 — 524,875 347,027 871,902 2.1% 871,902Inner Mongolia Autonomous Region 3 — 575,788 — 575,788 1.4% 575,788Gansu Province 2 — 194,775 — 194,775 0.5% 194,775Shanxi Province 1 — 181,995 — 181,995 0.4% 181,995Ningxia Hui Autonomous Region 1 — 166,813 — 166,813 0.4% 166,813Guizhou Province 2 — 61,473 90,531 152,004 0.4% 152,004Chongqing 2 — 113,761 21,184 134,945 0.3% 134,945
Subtotal 81 — 9,369,131 3,101,571 12,470,702 29.8% 12,470,702
Pan-Bohai Economic Rim
Shandong Province 17 — 1,754,003 308,645 2,062,648 4.9% 2,062,648Hebei Province 2 — 173,306 203,841 377,147 0.9% 377,147Tianjin 1 — 258,721 — 258,721 0.6% 258,721Liaoning Province 2 — 147,370 — 147,370 0.4% 147,370
Subtotal 22 — 2,333,400 512,486 2,845,886 6.8% 2,845,886
Western Taiwan Straits Economic Zone
Jiangxi Province 26 263,699 2,698,795 — 2,962,494 7.1% 2,962,494Fujian Province 10 103,120 793,570 808,942 1,705,632 4.1% 1,705,632
Subtotal 36 366,819 3,492,365 808,942 4,668,126 11.2% 4,668,126
Pearl River Delta Economic Zone
Guangdong Province 8 — 1,078,095 — 1,078,095 2.6% 1,078,095
Subtotal 8 — 1,078,095 — 1,078,095 2.6% 1,078,095
Total 281 1,101,658 28,543,432 7,234,029 36,879,119 88.0% 36,879,119
17ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
The following table sets forth the breakdown of the total land bank attributable to the Group developed by the Group’s joint ventures and associates in terms of geographic location as at 30 June 2019:
Number of
projects
Completed GFA
available for
sale/leasable
GFA(1) (sq.m.)
Planned GFA
under
development
(sq.m.)
Estimated GFA
for future
development
(sq.m.)
Total land bank
attributable to
the Group(2)(3)
(sq.m.)
% of total
land bank
attributable to
the Group
Total
land bank(3)
(sq.m.)
Yangtze River Delta Economic Region
Zhejiang Province 49 353,342 1,229,448 29,003 1,611,793 3.8% 5,593,340
Jiangsu Province 17 42,713 972,933 126,537 1,142,183 2.7% 2,961,554
Anhui Province 6 — 226,188 57,244 283,432 0.7% 1,536,196
Subtotal 72 396,055 2,428,569 212,784 3,037,408 7.2% 10,091,090
Midwest China Economic Region
Chongqing 4 — 374,000 — 374,000 0.9% 955,396
Yunnan Province 2 — 81,771 109,940 191,711 0.5% 404,940
Hunan Province 3 — 165,165 — 165,165 0.4% 504,360
Hubei Province 2 — 31,909 110,726 142,635 0.3% 301,210
Henan Province 1 — 49,195 — 49,195 0.1% 98,390
Guangxi Zhuang Autonomous Region 1 — 20,478 — 20,478 0.0% 70,613
Subtotal 13 — 722,518 220,666 943,184 2.2% 2,334,909
Pan-Bohai Economic Rim
Shandong Province 4 — 129,094 — 129,094 0.3% 561,762
Liaoning Province 1 — — 17,093 17,093 0.0% 33,848
Subtotal 5 — 129,094 17,093 146,187 0.3% 595,610
Western Taiwan Straits Economic
Zone
Fujian Province 8 — 302,859 — 302,859 0.7% 945,020
Jiangxi Province 5 — 452,597 194,266 646,863 1.5% 1,987,333
Subtotal 13 — 755,456 194,266 949,722 2.2% 2,932,353
Pearl River Delta Economic Zone
Guangdong Province 1 — 12,905 36,051 48,956 0.1% 163,186
Subtotal 1 — 12,905 36,051 48,956 0.1% 163,186
Total 104 396,055 4,048,542 680,860 5,125,457 12.0% 16,117,148
Total land bank 385 1,497,713 32,591,974 7,914,889 42,004,576 100.0% 52,996,267
18 ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
The following table sets forth the breakdown of the total land bank attributable to the Group developed by the Group’s subsidiaries, joint ventures and associate in terms of tier of city as at 30 June 2019:
Number of
projects
Completed GFA
available for
sale/leasable
GFA(1) (sq.m.)
Planned GFA
under
development
(sq.m.)
Estimated GFA
for future
development
(sq.m.)
Total land bank
attributable to
the Group(2)
(sq.m.)
% of total
land bank
attributable to
the Group
Total
land bank(3)
(sq.m.)
Second-tier cities 109 331,695 5,688,994 1,626,334 7,647,023 18.2% 11,955,041
Third-tier cities 224 998,647 20,607,066 5,313,793 26,919,506 64.1% 31,987,160
Forth-tier cities 52 167,371 6,295,914 974,762 7,438,047 17.7% 9,054,066
Total land bank 385 1,497,713 32,591,974 7,914,889 42,004,576 100.0% 52,996,267
Notes:
(1) Includes saleable GFA remaining unsold, leasable GFA and completed GFA that have been pre-sold but yet delivered.
(2) Total land bank attributable to the Group equals to the sum of (i) total completed GFA available for sale/leasable GFA; (ii) total planned GFA for properties
under development; and (iii) total estimated GFA for properties held for future development, adjusted by the equity interest held by the Group in respect
of the projects held by the Group’s joint ventures and associates.
(3) Total land bank equals to the sum of (i) total completed GFA available for sale/leasable GFA; (ii) total planned GFA for properties under development; and (iii)
total estimated GFA for properties held for future development without adjusting the equity interest held by the Group in respect of he projects held by
the Group’s joint ventures or associates.
FINANCIAL REVIEW
Revenue
During the six months ended 30 June 2019, the Group derived its revenue from three business lines, namely (i) sales of properties; (ii) management consulting services; and (iii) rental income from property lease. The revenue of the Group was primarily derived from the sales of properties in the PRC. The following table sets forth the details of the Group’s revenue recognised by business line for the periods indicated:
For the six months ended 30 June
Change in percentage
2019(RMB’000)
2018(RMB’000)
RevenueRevenue from contracts with customersSales of properties 20,413,499 9,621,368 +112.2%Management consulting services 138,918 103,479 +34.2%Property management services — 6,321 -100.0%
Revenue from other sourcesRental income 4,148 — N/A
Total 20,556,565 9,731,168 +111.2%
19ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
The revenue of the Group increased by approximately 111.2% from RMB9,731.2 million for the six months ended 30 June 2018 to RMB20,556.6 million for the six months ended 30 June 2019. This increase was mainly attributable to:
(i) the increase in the total recognised GFA by approximately 129.8% from 790,437 sq.m. for the six months ended 30 June 2018 to 1,816,690 sq.m. for the six months ended 30 June 2019;
(ii) the increase in revenue from management consulting services by approximately 34.2% from RMB103.5 million for the six months ended 30 June 2018 to RMB138.9 million for the six months ended 30 June 2019; and
(iii) the increase in rental income from property lease from nil for the six months ended 30 June 2018 to RMB4.1 million for the six months ended 30 June 2019. The rental income from property lease in the first half of 2019 was mainly contributed by the Group’s investment properties located in Wenzhou.
The impact was partially offset by (i) the decrease in the recognised ASP of properties delivered by the Group by approximately 7.7% from RMB12,172 per sq.m. for the six months ended 30 June 2018 to RMB11,237 per sq.m. for the six months ended 30 June 2019 due to the decrease in proportion of recognised revenue contributed by Yangtze River Delta Economic Region where generally had higher ASP; and (ii) the decrease in revenue from property management services, which was an ancillary business of the Group, from RMB6.3 million for the six months ended 30 June 2018 to nil for the six months ended 30 June 2019 as a result of the disposal of such ancillary business from the Group upon reorganisation in the process of the Listing.
Revenue generated from the sales of properties amounted to RMB20,413.5 million for the six months ended 30 June 2019. The following table sets forth the details of the revenue generated from the sales of properties, the total recognised GFA and recognised ASP for the Group’s projects by geographical location for the six months ended 30 June 2019, together with the comparative figures for the corresponding period in 2018:
For the six months ended 30 June2019 2018
Revenue Recognised
GFARecognised
ASP RevenueRecognised
GFARecognised
ASP(RMB’000) (sq.m.) (RMB/sq.m.) (RMB’000) (sq.m.) (RMB/sq.m.)
Yangtze River Delta Economic Region
Wenzhou 1,754,890 143,463 12,232 2,955,757 218,948 13,500Ningbo 1,296,358 122,009 10,625 1,581,379 121,709 12,993Suzhou 51,706 3,367 15,357 68,713 3,778 18,187Shaoxing 47,499 6,118 7,764 243,075 28,946 8,398Taizhou 3,099,525 247,486 12,524 1,380,590 101,440 13,610Hangzhou 62,795 4,600 13,651 74,118 6,589 11,249Others 10,843,444 887,042 12,224 2,587,325 212,234 12,191
Subtotal 17,156,217 1,414,085 12,132 8,890,957 693,644 12,818
Midwest China Economic RegionDazhou 52,437 7,870 6,663 100,924 15,523 6,502Kunming 83,971 9,536 8,806 18,116 2,768 6,545Changsha 7,334 1,407 5,213 11,449 2,183 5,245Others 558,775 75,446 7,406 60,412 8,113 7,446
Subtotal 702,517 94,259 7,453 190,901 28,587 6,678
20 ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
For the six months ended 30 June2019 2018
Revenue Recognised
GFARecognised
ASP RevenueRecognised
GFARecognised
ASP(RMB’000) (sq.m.) (RMB/sq.m.) (RMB’000) (sq.m.) (RMB/sq.m.)
Pan-Bohai Economic RimYantai 3,205 502 6,384 28,535 5,217 5,470Linyi 10,466 1,014 10,321 7,831 955 8,200Others 75,643 10,502 7,203 13,278 1,813 7,324
Subtotal 89,314 12,018 7,432 49,644 7,985 6,217
Western Taiwan Straits Economic Zone
Ganzhou 695,637 65,915 10,554 197,694 24,889 7,943Ningde 55,091 7,058 7,805 85,320 8,645 9,869Jiujiang 13,672 1,772 7,716 67,973 7,502 9,061Others 1,681,693 218,834 7,685 138,879 19,185 7,239
Subtotal 2,446,093 293,579 8,332 489,866 60,221 8,134
Pearl River Delta Economic Zone 19,358 2,749 7,042 — — —
Total 20,413,499 1,816,690 11,237 9,621,368 790,437 12,172
Cost of sales
The Group’s cost of sales increased by approximately 119.5% from RMB7,070.9 million for the six months ended 30 June 2018 to RMB15,522.1 million for the six months ended 30 June 2019. This increase was generally in line with the increase in the Group’s total revenue.
Gross profit and gross profit margin
Gross profit represents revenue less cost of sales. As a result of the foregoing, the Group’s gross profit increased by approximately 89.2% from RMB2,660.3 million for the six months ended 30 June 2018 to RMB5,034.5 million for the six months ended 30 June 2019.
The Group’s gross profit margin decreased from 27.3% for the six months ended 30 June 2018 to 24.5% for the six months ended 30 June 2019, mainly because of higher land acquisition costs relative to the respective ASP in respect of property projects delivered during the period.
Finance income
The Group’s finance income (mainly represents bank interest income) increased by approximately 29.9% from RMB148.1 million for the six months ended 30 June 2018 to RMB192.3 million for the six months ended 30 June 2019, primarily due to the increase in bank balances and cash.
21ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
Other income and gains
The Group’s other income and gains primarily include (i) gain on disposal of subsidiaries; (ii) forfeiture of deposits; (iii) government grants; and (iv) others, which mainly include sundry income. The Group’s other income increased by approximately 11.0% from RMB56.0 million for the six months ended 30 June 2018 to RMB62.1 million for the six months ended 30 June 2019.
Selling and distribution expenses
The Group’s selling and distribution expenses increased by approximately 134.0% from RMB430.6 million for the six months ended 30 June 2018 to RMB1,007.4 million for the six months ended 30 June 2019, primarily due to the increase in marketing expenses incurred for launching of property projects available for pre-sale during the period.
Administrative expenses
The Group’s administrative expenses increased by approximately 67.9% from RMB628.6 million for the six months ended 30 June 2018 to RMB1,055.2 million for the six months ended 30 June 2019, primarily due to the increase in administrative and staff costs as a result of the Group’s business expansion.
Finance costs
The Group’s finance costs increased by approximately 74.3% from RMB143.9 million for the six months ended 30 June 2018 to RMB250.9 million for the six months ended 30 June 2019, primarily due to the increase in interest on the Group’s bank and other borrowings as a result of the increase in amount of borrowings and interest rates, partially offset by the increase in interest capitalised in properties under development.
The Group’s total finance costs expensed and capitalised for the six months ended 30 June 2019 was approximately RMB2,122.1 million, representing an increase of 61.0% from RMB1,318.3 million for the six months ended 30 June 2018. The increase was due to the increase in bank borrowings and interest rates.
The Group’s weighted average effective cost of indebtedness for total borrowings for the period was approximately 10.0% (31 December 2018: approximately 9.9%).
Share of profits/losses of joint ventures
The Group recorded share of losses of joint ventures accounted for using the equity method of RMB49.4 million for the six months ended 30 June 2018 and share of profits of joint ventures of RMB44.1 million for the six months ended 30 June 2019. Such change was primarily due to the delivery of property projects held by the Group’s joint ventures which generated profit during the six months ended 30 June 2019.
Share of profits of associates
The Group’s share of profits of associates increased by approximately 63.5% from RMB103.7 million for the six months ended 30 June 2018 to RMB169.6 million for the six months ended 30 June 2019, primarily due to the increase in delivery of property projects held by the Group’s associates during the six months ended 30 June 2019.
22 ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
Profit before tax
As a result of the aforementioned changes of the Group’s financials, the Group’s profit before tax increased by approximately 97.1% from RMB1,620.0 million for the six months ended 30 June 2018 to RMB3,193.3 million for the six months ended 30 June 2019.
Income tax expense
The Group’s income tax expense comprises provisions made for CIT and LAT in the PRC less deferred tax during the period.
The Group’s income tax expense increased by approximately 65.3% from RMB783.0 million for the six months ended 30 June 2018 to RMB1,294.6 million for the six months ended 30 June 2019.
The effective income tax rate of the Group for the six months ended 30 June 2019 was 29.4%, compared to 31.1% for the six months ended 30 June 2018. Effective income tax rate was calculated based on the quotient of (a) the result of CIT plus deferred tax, divided by (b) the result of profit before tax minus LAT.
Profit and core net profit for the period attributable to the owners of the Company
As a result of the aforementioned changes of the Group’s financials, the Group’s profit for the period attributable to owners of the Company increased by approximately 81.8% from RMB662.5 million for the six months ended 30 June 2018 to RMB1,204.1 million for the six months ended 30 June 2019. The Group’s core net profit for the period attributable to the owners of the Company increased by approximately 88.4% from RMB654.2 million for the six months ended 30 June 2018 to RMB1,232.2 million for the six months ended 30 June 2019.
LIQUIDITY, FINANCIAL AND CAPITAL RESOURCES
The industry in which the Group engages is a capital-intensive industry. The Group met and expects to continue meeting its operating capital, capital expenditure and other capital needs with proceeds from the Listing and cash generated from operations including proceeds from sale and pre-sale of properties, bank loans, which include entrusted bank loans provided by ultimate third-party lenders through commercial banks as an intermediary, loans from independent third parties (excluding from financial institutions and private placement asset management plans), trust financing and asset management arrangements, capital contribution from non-controlling shareholders and other financings. The Group’s need for long-term liquid capital is associated with capital allocated for new property development projects and repayment of long-term loans.
Net current assets
As at 30 June 2019, the Group’s net current assets amounted to RMB14,900.9 million (31 December 2018: RMB11,945.2 million). Specifically, the Group’s total current assets increased by approximately 17.4% from RMB160,394.2 million as at 31 December 2018 to RMB188,382.4 million as at 30 June 2019. The Group’s total current liabilities increased by approximately 16.9% from RMB148,449.0 million as at 31 December 2018 to RMB173,481.5 million as at 30 June 2019. The increase in the Group’s total current assets was primarily attributable to (i) the increase in properties under development; and (ii) the increase in prepayments and other receivables during the period.
Cash position
As at 30 June 2019, the Group had bank balances and cash of RMB24,721.4 million (31 December 2018: RMB23,080.4 million), of which RMB24,710.7 million (31 December 2018: RMB23,080.4 million) was denominated in RMB and RMB10.7 million (31 December 2018: RMB8,000) was denominated in HK$.
23ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
Indebtedness
As at 30 June 2019, the Group had total outstanding borrowings of RMB28,802.2 million (31 December 2018: RMB27,004.9 million), of which RMB20,933.1 million (31 December 2018: RMB20,259.4 million) was carried at fixed rates. All of the Group’s borrowings were denominated in RMB.
The following table sets forth Group’s total borrowings as at the dates indicated:
As at 30 June
2019
As at 31 December
2018RMB’000 RMB’000
Current Bank loans — secured 1,033,900 490,000— unsecured 227,000 232,000Other loans— secured 5,613,528 5,854,621— unsecured 720,460 673,201Current portion of long-term bank loans— secured 3,283,915 4,593,900Current portion of long-term other loans— secured 3,536,100 2,624,950— unsecured 51,677 —
Total current borrowings 14,466,580 14,468,672
Non-currentBank loans — secured 8,860,414 5,211,318— unsecured 1,150,000 820,000Other loans— secured 4,024,806 4,844,927— unsecured 300,400 1,660,000
Total non-current borrowings 14,335,620 12,536,245
Total borrowings 28,802,200 27,004,917
Total secured borrowings 26,352,663 23,619,716
Total unsecured borrowings 2,449,537 3,385,201
24 ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
The following table sets forth the maturity profiles of the Group’s total borrowings as at the dates indicated:
As at 30 June
2019
As at 31 December
2018RMB’000 RMB’000
Bank loans repayable: — Within one year or on demand 4,544,815 5,315,900— In the second year 5,131,891 3,979,318— In the third to fifth year, inclusive 4,878,523 2,052,000
14,555,229 11,347,218
Other borrowings repayable:— Within one year or on demand 9,921,765 9,152,772— In the second year 4,001,829 6,104,927— In the third to fifth year, inclusive 323,377 400,000
14,246,971 15,657,699
Total 28,802,200 27,004,917
Pledge of assets
As at 30 June 2019, the Group’s borrowings were secured by the Group’s assets of RMB43,287.6 million (31 December 2018: RMB43,669.7 million) which included (i) investment properties; (ii) properties under development; and (iii) pledged deposits.
Financial risks
The Group’s activities expose it to a variety of financial risks, including interest rate risk, credit risk and liquidity risk. Generally, the Group introduces conservative strategies on its risk management and did not use any derivatives or other instruments for hedging purposes during the period.
Interest rate riskThe Group’s exposure to risk for changes in market interest rates relates primarily to the Group’s interest bearing bank and other borrowings. The Group manages its interest cost using variable rate bank borrowings and other borrowings. During the period, the Group did not use derivative financial instruments to hedge interest rate risk.
25ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
Credit riskThe Group divides financial instruments on the basis of shared credit risk characteristics, such as instrument type and credit risk ratings for the purpose of determining significant increases in credit risk and calculation of impairment. To manage risk arising from trade receivables, the Group has policies in place to ensure that credit terms are made only to counterparties with an appropriate credit history and management performs ongoing credit evaluations of the Group’s counterparties. The Directors believe that, during the period, there is no material credit risk inherent in the Group’s outstanding balance of financial assets included in prepayments and other receivables and amounts due from related companies.
Liquidity riskThe Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of interest-bearing bank and other borrowings. Cash flows are closely monitored on an ongoing basis.
Foreign exchange exposureThe Group primarily operates its business in China and substantially all of its revenue and expenditures are denominated in RMB, while the net proceeds from the Listing and any payment of dividends will be made in HK$. As at 30 June 2019, the Group had bank balances and cash denominated in RMB of RMB24,710.7 million and in HK$ of RMB10.7 million, which are subject to fluctuations in exchange rates.
The Group does not have a foreign currency hedging policy. However, the Group will closely monitor the its exposure to exchange rates in order to best preserve the Group’s cash value.
CONTINGENT LIABILITIES
Mortgage guarantees
The Group provided guarantees in respect of mortgage facilities granted by certain banks to the purchasers of the Group’s completed properties held for sale. Pursuant to the terms of the guarantee arrangements, in case of default on mortgage payments by the purchasers, the Group is responsible to repay the outstanding mortgage principals together with any accrued interest and penalties owed by the defaulted purchasers to those banks. Under such arrangement, the related properties were pledged to the banks as collateral for the mortgage loans, upon default on mortgage repayments by these purchasers, the banks are entitled to take over the legal titles and will realise the pledged properties through open auction.
The Group’s guarantee period starts from the dates of grant of the relevant mortgage loans and ends upon the issuance and registration of property ownership certificates to the purchasers, which will generally be available within half a year to two years after the purchasers take possession of the relevant properties.
The total outstanding guarantee amounts provided by the Group to banks amounted to RMB40,261.6 million as at 30 June 2019 (31 December 2018: RMB28,897.3 million).
The Group did not incur any material losses during the period in respect of the guarantees provided for mortgage facilities granted to purchasers of the Group’s completed properties held for sale. The Directors of the Company considered that in case of default on payments, the net realisable value of the related properties would be sufficient to repay the outstanding mortgage loans together with any accrued interest and penalty, and therefore no provision has been made in connection with the guarantees.
26 ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
Financial guarantees
As at 30 June 2019, the Group guaranteed certain of the bank and other borrowings made to its joint ventures and associates up to RMB8,326.9 million (31 December 2018: RMB6,594.2 million).
Legal contingents
The Group may be involved in lawsuits and other proceedings in its ordinary course of business from time to time. The Group believes that no liabilities resulting from these proceedings will have a material and adverse effect on its business, financial condition or operating results.
COMMITMENTS
As at 30 June 2019, the Group’s property development expenditures and acquisition of land use rights and capital contributions payable to joint ventures and associates that had contracted but yet provided for were RMB48,822.5 million (31 December 2018: RMB44,047.4 million).
OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS
Except for the contingent liabilities disclosed above, as at 30 June 2019, the Group did not have any outstanding loan capital issued or agreed to be issued, bank overdrafts, loans, debt securities, borrowings or other similar indebtedness, liabilities under acceptances (other than normal trade bills), acceptance credits, debentures, mortgages, charges, finance leases or hire purchase commitments, guarantees or other material contingent liabilities.
MATERIAL ACQUISITION AND DISPOSAL OF SUBSIDIARIES, ASSOCIATED COMPANIES AND JOINT VENTURES
Save as disclosed in notes 18 and 19 to the interim condensed consolidated financial statements on page 59 to page 62 in this report, the Group did not have any material acquisition or disposal of subsidiaries, associated companies and joint ventures during the six months ended 30 June 2019.
SIGNIFICANT INVESTMENTS HELD BY THE GROUP
Save as disclosed in note 11 to the interim condensed consolidated financial statements on page 51 to page 52 in this report, there were no significant investment held by the Group as at 30 June 2019.
27ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
MANAGEMENT DISCUSSION AND ANALYSIS
FUTURE PLANS FOR MATERIAL INVESTMENTS
The Group will continue to focus on its existing property development business and acquiring high-quality land parcel in China. No concrete plan for future investments is in place as at the date of this report.
USE OF PROCEEDS FROM INITIAL PUBLIC OFFERING
As at the date of this interim report, net proceeds from the Listing not utilised are held in bank and it is intended that they will be applied in the manner consistent with the proposed allocations as set out in the prospectus of the Company dated 27 June 2019 (the “Prospectus”).
EMPLOYEE AND REMUNERATION POLICY
As at 30 June 2019, the Group employed a total of 12,575 full-time employees. For the six months ended 30 June 2019, the staff cost recognised as expenses of the Group amounted to RMB719.0 million (30 June 2018: RMB355.3 million).
The Group offers its employees competitive remuneration packages that include basic salaries, discretionary bonuses, performance-based payments and year-end bonuses, so as to attract and retain quality staff. In addition, subject to the Group’s management system, the Amoeba Ecosystem, employees who participate in the Group’s incentive plan, namely the co-investment schemes under the Amoeba Ecosystem may also be entitled to receive the benefit distribution derived from the relevant projects pursuant to the co-investment scheme and may also be rewarded additional bonuses when the project of the Amoeba unit he or she belongs to has achieved certain performance targets. In addition, the Group has adopted the post-IPO share option scheme (the “Share Option Scheme”) on 19 June 2019, details of which are set out in the Prospectus. As required by PRC regulations, the Group makes contributions to mandatory social security funds for the benefit of the Group’s PRC employees that provide for basic medical insurance, work-related injury insurance, basic retirement insurance, maternity insurance, unemployment insurance and housing funds.
EVENTS AFTER THE REPORTING PERIOD
(1) In connection with the Listing, the Company issued 530,000,000 new ordinary shares with a nominal value of HK$0.01 each at a price of HK$5.55 per ordinary share for a total cash consideration of HK$2,941.5 million, before deducting underwriting fees, commissions and related expenses. In addition, the Company issued 2,990,305,325 shares by way of capitalisation. Dealings in the shares of the Company on the Stock Exchange commenced on 16 July 2019.
(2) As disclosed in the Prospectus, the guarantees provided by the Company’s controlling shareholders and one of its associates would be released prior to the Listing. Upon the Listing, such guarantees were released.
(3) On 5 August 2019, the over-allotment option were partially exercised and the Company allotted and issued 51,791,500 additional shares at HK$5.55 per share on 7 August 2019.
28
CORPORATE GOVERNANCE AND OTHER INFORMATION
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
CORPORATE GOVERNANCE
The Group is committed to achieving high standards of corporate governance to safeguard the interests of the holders (the “Shareholders”) of the shares (the “Shares”) of the Company and to enhance corporate value and accountability.
The Company has adopted the corporate governance code (the “Corporate Governance Code”) contained in Appendix 14 to the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”) as its own code on corporate governance since the Listing.
As the Company was listed on 16 July 2019, the Company was not required to comply with the Corporate Governance Code during the period.
COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as contained in Appendix 10 to the Listing Rules (the “Model Code”) as the guidelines for the Directors’ dealings in the securities of the Company since the Listing.
As the Company was listed on 16 July 2019, the Company was not required to comply with the Model Code during the period.
SHARE OPTION SCHEME
The Company approved and adopted the Share Option Scheme on 19 June 2019. The Share Option Scheme is subject to the requirements under Chapter 17 of the Listing Rules.
Details of the Share Option Scheme
(1) PurposeThe purpose of the Share Option Scheme is to provide selected participants with the opportunity to acquire proprietary interests in the Company and to encourage selected participants to work towards enhancing the value of the Company and its Shares for the benefit of the Company and Shareholders as a whole. The Directors believe the Share Option Scheme will enable the Group to reward its employees, the Directors and other selected participants for their contributions to the Group. The Share Option Scheme provides the Company with a flexible means of retaining, incentivising, rewarding, remunerating, compensating and/or providing benefits to selected participants.
(2) ParticipantsAny individual, being an employee, director, officer, consultant, advisor, distributor, contractor, customer, supplier, agent, business partner, joint venture business partner or service provider of any member of the Company or any affiliate who the Board or its delegate(s) considers, in their sole discretion, to have contributed or will contribute to the Company is entitled to be offered and granted options. However, no individual who is resident in a place where the grant, acceptance or exercise of options pursuant to the Share Option Scheme is not permitted under the laws and regulations of such place or where, in the view of the Board or its delegate(s), compliance with applicable laws and regulations in such place makes it necessary or expedient to exclude such individual, is eligible to be offered or granted options.
29ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
CORPORATE GOVERNANCE AND OTHER INFORMATION
(3) The maximum number of Shares available for issueThe total number of Shares which may be issued upon exercise of all options to be granted under the Share Option Scheme shall not in aggregate exceed 10% of the aggregate of the Shares in issue on the day on which trading of the Shares commences on the Stock Exchange, and such 10% limit represents 353,000,000 Shares, representing 10% of the total Shares in issue as at the date of the Listing.
(4) The maximum entitlement of each participantThe total number of Shares issued and to be issued upon exercise of the options granted and to be granted under the Share Option Scheme and any other share option scheme of the Group (including both exercised and outstanding options) to each participant in any 12-month period shall not exceed 1% of the issued share capital of the Company for the time being.
(5) Time of acceptance and exercise of optionAn option may, subject to the terms and conditions upon which such option is granted, be exercised in whole or in part by the grantee giving notice in writing to the Company in such form as the Board may from time to time determine stating that the option is thereby exercised and the number of Shares in respect of which it is exercised.
(6) Subscription price for SharesThe subscription price per Share under the Share Option Scheme will be a price determined by the Directors, but shall not be less than the highest of:
(i) the closing price of the Shares as stated in the Stock Exchange’s daily quotations sheet on the date of the offer of grant, which must be a business day;
(ii) the average closing price of the Shares as stated in the Stock Exchange’s daily quotations sheets for the five business days immediately preceding the date of grant; and
(iii) the nominal value of a Share on the date of grant.
(7) The duration of the Share Option SchemeThe Share Option Scheme shall be valid and effective for the period of ten years commencing on the Listing Date (after which, no further options shall be offered or granted under the Share Option Scheme), but in all other respects the provisions of the Share Option Scheme shall remain in full force and effect to the extent necessary to give effect to the exercise of any options granted prior thereto or otherwise as may be required in accordance with the provisions of the rules of the Share Option Scheme.
For further details of the Share Option Scheme, please refer to the section headed “Statutory and general information — D. Share incentive scheme” in Appendix V to the Prospectus.
Since the adoption of the Share Option Scheme and up to the date of this report, no option was granted or agreed to be granted, exercised or cancelled by the Company pursuant to the Share Option Scheme. There was no outstanding share option under the Share Option Scheme as at the date of this interim report.
30 ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
CORPORATE GOVERNANCE AND OTHER INFORMATION
DIRECTORS’ AND CHIEF EXECUTIVES’ INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ITS ASSOCIATED CORPORATIONS
The Shares were not listed on the Stock Exchange as at 30 June 2019. Accordingly, Divisions 7 and 8 of Part XV of the Securities and Futures Ordinance (the “SFO”), Chapter 571 of the laws of the Hong Kong Special Administrative Region and Section 352 of the SFO were not applicable to the Company as at 30 June 2019. As at the date of this interim report, the interests and short positions of the Directors and the chief executives of the Company in the Shares, underlying Shares and debentures of the Company or its associated corporation (within the meaning of Part XV of the SFO) which were required to be entered in the register kept by the Company pursuant to section 352 of the SFO, or which were otherwise required, to be notified to the Company and the Stock Exchange pursuant to the Model Code, are set out below:
Interests in Shares of the Company
Name of Director/Chief Executive Nature of Interest
Number of Shares or
underlying Shares(Note 1)
Approximate percentage of
shareholding(Note 1)
Mr. Yang Jian (“Mr. Yang”) Interest in controlled corporations(Note 2) 2,911,288,929 (L) 81.28%
Interest of spouse(Note 3) 59,414,060 (L) 1.66%
Notes:
(1) As at the date of this interim report, the Company issued 3,581,791,500 Shares. The letter (L) denotes the entity’s long position in the relevant Shares.
(2) Liangzhong International Co., Ltd. (“Liangzhong”) and Liangyi International Co., Ltd. (“Liangyi”), each of which a company directly wholly-owned by Mr.
Yang, directly holds 2,822,167,839 Shares and 89,121,090 Shares of the Company, respectively. Accordingly, Mr. Yang is deemed to be interested in
2,822,167,839 Shares and 89,121,090 Shares held by Liangzhong and Liangyi, respectively.
(3) Liangtai International Co., Ltd. (“Liangtai”), a company directly wholly owned by Ms. Xu Xiaoqun (“Ms. Xu”), the spouse of Mr. Yang, directly holds
59,414,060 Shares of the Company. Accordingly, Ms. Xu is deemed to be interested in 59,414,060 Shares held by Liangtai. Under the SFO, Mr. Yang,
as the spouse of Ms. Xu, is deemed to be interested in the same number of Shares in which Ms. Xu is interested.
Save as disclosed above, as at the date of this interim report, none of the Directors and chief executives of the Company had, or were deemed to have any interests or short positions in the Shares, underlying Shares and debentures of the Company or its associated corporations, recorded in the register required to be kept under section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.
31ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
CORPORATE GOVERNANCE AND OTHER INFORMATION
SUBSTANTIAL SHAREHOLDERS’ AND OTHER PERSONS’ INTERESTS AND SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY
The Shares were not listed on the Stock Exchange as at 30 June 2019. Accordingly, Divisions 2 and 3 of Part XV of the SFO and Section 336 of the SFO were not applicable to the Company as at 30 June 2019. As at the date of this interim report, so far as is known to the Company, as recorded in the register required to be kept by the Company under section 336 of the SFO, the following persons, other than a Director or chief executive of the Company, had an interest of 5% or more in the Shares or underlying Shares:
Name of Shareholder Nature of Interest
Number of Shares or
underlying Shares(Note 1)
Approximate percentage of
shareholding(Note 1)
Liangzhong Beneficial owner 2,822,167,839 (L) 78.79%Liangyi Beneficial owner 89,121,090 (L) 2.49%Liangtai Beneficial owner 59,414,060 (L) 1.66%Ms. Xu Interest in controlled corporation 59,414,060 (L) 1.66%
Interest of spouse 2,911,288,929 (L) 81.28%
Note:
(1) As at the date of this interim report, the Company issued 3,581,791,500 Shares. The letter (L) denotes the entity’s long position in the relevant Shares.
Save as disclosed above, as at the date of this interim report, the Company had not been notified by any persons (other than a Director or chief executive of the Company) who had an interest or short position in the Shares or underlying Shares that were recorded in the register required to be kept under section 336 of the SFO.
INTERIM DIVIDEND
On 22 August 2019, the Board resolved to declare an Interim Dividend of HKD15.3 cents (equivalent to RMB13.8 cents) per Share for the six months ended 30 June 2019 to the Shareholders whose name appear on the register of member of the Company at the close of business on Tuesday, 5 November 2019. The Interim Dividend is expected to be paid on or about Friday, 15 November 2019.
There is no arrangement under which the Shareholder has waived or agreed to waive any dividends.
CLOSURE OF RESISTER OF MEMBERS
For the purpose of determining Shareholders who qualify for the Interim Dividend, the register of members of the Company will be closed from Friday, 1 November 2019 to Tuesday, 5 November 2019, both days inclusive. In order to qualify for the Interim Dividend, all transfer documents should be lodged for registration the Company’s Hong Kong branch share registrar, Computershare Hong Kong Investor Services Limited at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on Thursday, 31 October 2019.
32 ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
CORPORATE GOVERNANCE AND OTHER INFORMATION
PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY
The Company’s shares were listed on the Stock Exchange on 16 July 2019. Save for that the Company had issued new shares in connection with the Listing as disclosed in this interim report, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the listed securities of the Company since the Listing and up to the date of this interim report.
AUDIT COMMITTEE
The Board established an audit committee (the “Audit Committee”) with written terms of reference in compliance with the Corporate Governance Code. The terms of reference of the Audit Committee has been uploaded to the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.zldcgroup.com).
The primary duties of the Audit Committee are to review, supervise and approve the financial reporting process and internal control system and to provide advice and comments to the Board. The Audit Committee consists of three members, namely Mr. Au Yeung Po Fung, Mr. Wang Kaiguo and Mr. Wu Xiaobo, each of them is an independent non-executive Director. The chairman of the Audit Committee is Mr. Au Yeung Po Fung, who possesses appropriate professional qualifications.
The Audit Committee had reviewed the interim results for the six months ended 30 June 2019. The interim results for the six months ended 30 June 2019 has not been audited but has been reviewed by Ernst & Young, the auditor of the Company, in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Hong Kong Institute of Certified Public Accountants.
By order of the BoardZhongliang Holdings Group Company Limited
Yang JianChairman
Hong Kong, 22 August 2019
33
REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
To the Board of Directors of Zhongliang Holdings Group Company Limited (Incorporated in the Cayman Islands with limited liability)
INTRODUCTION
We have reviewed the interim financial information set out on pages 35 to 72, which comprises the condensed consolidated statement of financial position of Zhongliang Holdings Group Company Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) as at 30 June 2019 and the related condensed consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the six-month period then ended, and other explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and International Accounting Standard 34 Interim Financial Reporting (“IAS 34”) issued by the International Accounting Standards Board (the “IASB”). The directors of the Company are responsible for the preparation and presentation of this interim financial information in accordance with IAS 34. Our responsibility is to express a conclusion on this interim financial information based on our review. Our report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.
SCOPE OF REVIEW
We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Hong Kong Institute of Certified Public Accountants. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
34 ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION
CONCLUSION
Based on our review, nothing has come to our attention that causes us to believe that the interim financial information is not prepared, in all material respects, in accordance with IAS 34.
Ernst & YoungCertified Public AccountantsHong Kong22 August 2019
35
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
For the six months ended 30 June
2019 2018(Unaudited) (Unaudited)
Notes RMB’000 RMB’000
REVENUE 5 20,556,565 9,731,168Cost of sales (15,522,059) (7,070,862)
GROSS PROFIT 5,034,506 2,660,306Finance income 192,294 148,082Other income and gains 5 62,143 55,985Selling and distribution expenses (1,007,433) (430,598)Administrative expenses (1,055,179) (628,560)Impairment losses on financial assets (5,014) (7,968)Changes in provision for financial guarantee contracts 21,434 —Other expenses (41,527) (116,275)Fair value gains on investment properties 11 29,093 31,552Fair value gains/(losses) on financial assets at fair value through profit or loss 210 (2,905)Finance costs 7 (250,853) (143,928)Share of profits and losses of:Joint ventures 44,095 (49,362)Associates 169,559 103,710
PROFIT BEFORE TAX 6 3,193,328 1,620,039Income tax expense 8 (1,294,640) (783,035)
PROFIT FOR THE PERIOD 1,898,688 837,004
Attributable to:Owners of the parent 1,204,108 662,461Non-controlling interests 694,580 174,543
1,898,688 837,004
EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT
Basic and diluted 10 RMB0.40 RMB0.22
36
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
30 June 31 December2019 2018
(Unaudited) (Audited)Notes RMB’000 RMB’000
NON-CURRENT ASSETSProperty, plant and equipment 99,726 105,269Investment properties 11 1,033,300 928,900Right-of-use assets 3(a) 128,247 —Intangible assets 678 455Investments in joint ventures 2,806,347 2,584,059Investments in associates 2,740,796 2,113,159Deferred tax assets 2,402,820 1,852,380Prepayments and other receivables 96,202 96,202
Total non-current assets 9,308,116 7,680,424
CURRENT ASSETSFinancial assets at fair value through profit or loss 233,967 228,757Properties under development 118,503,135 99,481,406Completed properties held for sale 1,436,442 3,596,396Trade receivables 12 — 4,354Due from related companies 22 7,877,700 9,841,443Prepayments and other receivables 33,097,763 22,209,895Tax recoverable 2,512,000 1,951,577Restricted cash 13 12,961,477 7,892,069Pledged deposits 13 1,695,586 636,777Cash and cash equivalents 13 10,064,372 14,551,518
Total current assets 188,382,442 160,394,192
CURRENT LIABILITIESTrade and bills payables 14 10,591,380 8,498,295Other payables and accruals 22,141,291 20,476,168Contract liabilities 114,183,968 95,482,250Due to related companies 22 9,695,817 7,419,138Interest-bearing bank and other borrowings 15 14,466,580 14,468,672Lease liabilities 24,054 —Tax payable 2,260,852 1,960,281Provision for financial guarantee contracts 16 63,435 84,869Other financial liabilities 54,124 59,284
Total current liabilities 173,481,501 148,448,957
NET CURRENT ASSETS 14,900,941 11,945,235
TOTAL ASSETS LESS CURRENT LIABILITIES 24,209,057 19,625,659
37ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
30 June 31 December2019 2018
(Unaudited) (Audited)Notes RMB’000 RMB’000
NON-CURRENT LIABILITIESInterest-bearing bank and other borrowings 15 14,335,620 12,536,245Lease liabilities 93,288 —Deferred tax liabilities 392,560 335,182
Total non-current liabilities 14,821,468 12,871,427
NET ASSETS 9,387,589 6,754,232
EQUITYEquity attributable to owners of the parentShare capital 17 85 85Reserves 3,873,331 2,578,591
3,873,416 2,578,676
Non-controlling interests 5,514,173 4,175,556
TOTAL EQUITY 9,387,589 6,754,232
38
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
Attributable to owners of the parent
Share
capital
Share
premium
Merger
reserve
Capital
reserve
Statutory
surplus
reserve
Retained
profits Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Note 17
As at 31 December 2018 and
1 January 2019 (audited) 85 954,732 3,138 (145,332) 606,519 1,159,534 2,578,676 4,175,556 6,754,232
Profit for the period — — — — — 1,204,108 1,204,108 694,580 1,898,688
Capital contribution from non-controlling
shareholders of subsidiaries — — — — — — — 733,233 733,233
Disposal of equity interests in subsidiaries
without losing control — — — 92,182 — — 92,182 (92,182) —
Acquisition of non-controlling interests — — — (1,550) — — (1,550) 1,550 —
Acquisition of a subsidiary — — — — — — — 1,436 1,436
As at 30 June 2019 (unaudited) 85 954,732 3,138 (54,700) 606,519 2,363,642 3,873,416 5,514,173 9,387,589
Attributable to owners of the parent
Share
capital
Share
premium
Merger
reserve
Capital
reserve
Statutory
surplus
reserve
Asset
revaluation
reserve
Equity
instrument
revaluation
reserve
(Accumulated
losses)/
Retained
profits Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Note 17
As at 31 December 2017 and
1 January 2018 (audited) — — 400,000 — 153,161 — — (318,444) 234,717 2,119,034 2,353,751
Profit for the period — — — — — — — 662,461 662,461 174,543 837,004
Capital contribution from
non-controlling shareholders
of subsidiaries — — — — — — — — — 1,098,161 1,098,161
Acquisition of subsidiaries by
the Group from the then
equity holder of subsidiaries — — (300,000) — — — — — (300,000) — (300,000)
Acquisition of subsidiaries — — — — — — — — — 71,937 71,937
As at 30 June 2018 (unaudited) — — 100,000 — 153,161 — — 344,017 597,178 3,463,675 4,060,853
39
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
For the six months ended 30 June
2019 2018(Unaudited) (Unaudited)
Notes RMB’000 RMB’000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax 3,193,328 1,620,039Adjustments for:
Depreciation of items of property, plant and equipment 6 22,761 27,941Depreciation of right-of-use assets 30,863 —Amortisation of intangible assets 6 161 130Impairment losses recognised for properties under development 6 31,952 37,931Impairment losses recognised for financial assets 5,014 7,968Changes in provision for financial guarantee contracts 16 (21,434) —Gain on disposal of subsidiaries 5 (29,128) (38,322)Gain on disposal of associates 5 — (787)Share of profits and losses of joint ventures (44,095) 49,362Share of profits and losses of associates (169,559) (103,710)Fair value gains on investment properties 11 (29,093) (31,552)Fair value (gains)/losses on financial assets and liabilities
at fair value through profit or loss (210) 2,905Finance costs 7 250,853 143,928Finance income (192,294) (148,082)
Increase in properties under development and completed properties held for sale (16,154,271) (23,863,454)
Increase in prepayments and other receivables (11,687,537) (11,971,814)Increase in restricted cash (5,069,408) (3,095,998)Increase in pledged deposits (870,299) (272,744)Decrease in trade receivables 4,354 —Increase/(decrease) in trade and bills payables 2,101,101 (49,777)Increase in other payables and accruals 2,841,523 10,184,462Increase in contract liabilities 19,461,811 28,577,402
Cash (used in)/generated from operations (6,323,607) 1,075,828
Interest received 192,294 95,168Interest paid (1,567,120) (1,041,906)Tax paid (2,062,155) (1,303,117)
Net cash flows used in operating activities (9,760,588) (1,174,027)
40 ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended 30 June
2019 2018(Unaudited) (Unaudited)
Notes RMB’000 RMB’000
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of items of property, plant and equipment (17,259) (21,417)Purchase of intangible assets (384) (59)Acquisition of financial assets at fair value through profit or loss (5,000) (1,407)Acquisition of subsidiaries 18 (19,432) (238,538)Disposal of subsidiaries 19 (323,184) —Disposal of financial assets at fair value through profit or loss — 28,723Investments in joint ventures and associates (1,084,187) (964,524)Disposal of investments in joint ventures and associates — 101,318Purchase of investment properties (75,307) (29,648)Advance to related companies 22 (4,179,730) (17,850,934)Repayment of advance to related companies 22 6,143,473 20,781,623
Net cash flows from investing activities 438,990 1,805,137
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contribution from non-controlling shareholders of subsidiaries 733,233 1,397,132Acquisition of subsidiaries by the Group from
the then equity holder of subsidiaries — (300,000)Advance from related companies 22 5,827,078 4,494,850Repayment of advance from related companies 22 (3,550,399) (3,409,727)Increase/(decrease) in pledged deposits (188,510) 276,367Principal portion of lease payments (41,768) —Proceeds from interest-bearing bank and other borrowings 18,000,990 9,016,570Repayment of interest-bearing bank and other borrowings (15,946,172) (11,821,299)
Net cash flows from/(used in) financing activities 4,834,452 (346,107)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (4,487,146) 285,003
Cash and cash equivalents at beginning of the period 14,551,518 10,748,022
CASH AND CASH EQUIVALENTS AT END OF PERIOD 10,064,372 11,033,025
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS
Cash and bank balances 13 24,721,435 19,861,701Less: Restricted cash 13 12,961,477 8,126,341 Pledged deposits 13 1,695,586 702,335
CASH AND CASH EQUIVALENTS AS STATED IN THE CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AND STATEMENTS OF CASH FLOWS 10,064,372 11,033,025
41
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
1. CORPORATE INFORMATION
The Company is an exempted company incorporated in the Cayman Islands. The registered office address of the Company is Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman, KY1-9008, Cayman Islands.
The Company is an investment holding company. During the six months ended 30 June 2019, the Group was principally engaged in property development, property leasing, and providing property management services and management consulting services. The immediate holding company of the Company is Liangzhong International Co., Ltd. The controlling shareholders of the Group are Mr. Yang Jian, Ms. Xu Xiaoqun, Liangzhong International Co., Ltd., Liangyi International Co., Ltd. and Liangtai International Co., Ltd. (the “Controlling Shareholders”).
2. BASIS OF PREPARATION
The interim condensed consolidated financial information for the six months ended 30 June 2019 has been prepared in accordance with IAS 34 Interim Financial Reporting issued by the International Accounting Standards Board (the “IASB”). The interim condensed consolidated financial information does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s consolidated financial statements included in the Accountants’ Report set forth in Appendix I to the Company’s Prospectus dated on 27 June 2019.
3. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
The accounting policies adopted in the preparation of the interim condensed consolidated financial information are consistent with those applied in the preparation of the Group’s annual consolidated financial statements for the year ended 31 December 2018, except for the adoption of new and revised International Financial Reporting Standards (“IFRSs”) effective as of 1 January 2019.
Amendments to IFRS 9 Prepayment Features with Negative CompensationIFRS 16 LeasesAmendments to IAS 19 Plan Amendment, Curtailment or SettlementAmendments to IAS 28 Long-term Interests in Associates and Joint VenturesIFRIC 23 Uncertainty over Income Tax TreatmentsAnnual Improvements
2015–2017 CycleAmendments to IFRS 3, IFRS 11, IAS 12 and IAS 23
Other than as explained below regarding the impact of IFRS 16 Leases, Amendments to IAS 28 Long-term Interests in Associates in Joint Ventures and IFRIC 23 Uncertainty over Income Tax Treatments, the new and revised standards are not relevant to the preparation of the Group’s interim condensed consolidated financial information. The nature and impact of the new and revised IFRSs are described below.
42
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
3. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued)
(a) Adoption of IFRS 16
IFRS 16 supersedes IAS 17 Leases (“IAS 17”), IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases - Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model. Lessor accounting under IFRS 16 is substantially unchanged under IAS 17. Lessors will continue to classify leases as either operating or finance leases using similar principles as in IAS 17. Therefore, IFRS 16 did not have an impact for leases where the Group is the lessor.
The Group adopted IFRS 16 using the modified retrospective method of adoption with the date of initial application of 1 January 2019. Under this method, the standard is applied retrospectively with the cumulative effects of initial adoption as adjustments to the opening balance of other right-of-use assets and lease liabilities at 1 January 2019, and the comparative information for 2018 was not restated and continues to be reported under IAS 17.
New definition of a leaseUnder IFRS 16, a contract is, or contains a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the customer has both the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset. The Group elected to use the transition practical expedient allowing the standard to be applied only to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed. Therefore, the definition of a lease under IFRS 16 has been applied only to contracts entered into or changed on or after 1 January 2019.
At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease and non-lease component on the basis of their standard-alone prices. A practical expedient is available to a lessee, which the Group has adopted, not to separate non-lease components and to account for the lease and the associated non-lease components as a single lease component.
As a lessee — Leases previously classified as operating leasesNature of the effect of adoption of IFRS 16The Group has lease contracts for various items of offices and office equipment. As a lessee, the Group previously classified leases as either finance leases or operating leases based on the assessment of whether the lease transferred substantially all the rewards and risks of ownership of assets to the Group. Under IFRS 16, the Group applies a single approach to recognise and measure right-of-use assets and lease liabilities for all leases, except for two elective exemptions for leases of low value assets (elected on a lease by lease basis) and short-term leases (elected by class of underlying asset). The Group has elected not to recognise right-of-use assets and lease liabilities for (i) leases of low-value assets and (ii) leases, that at the commencement date, have a lease term of 12 months or less. Instead, the Group recognises the lease payments associated with those leases as an expense on a straight-line basis over the lease term.
43
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
3. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued)
(a) Adoption of IFRS 16 (Continued)
As a lessee — Leases previously classified as operating leases (Continued)Impacts on transitionLease liabilities at 1 January 2019 were recognised based on the present value of the remaining lease payments, discounted using the incremental borrowing rate at 1 January 2019.
The right-of-use assets were measured at the amount of the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to the lease recognised in the statement of financial position immediately before 1 January 2019. All these assets were assessed for any impairment based on IAS 36 on that date. The Group elected to present the right-of-use assets separately in the statement of financial position. There are no lease assets recognised previously under finance leases that were reclassified from property, plant and equipment.
The Group has used the following elective practical expedients when applying IFRS 16 at 1 January 2019:
• Applied the short-term lease exemptions to leases with a lease term that ends within 12 months from the date of initial application
• Used hindsight in determining the lease term where the contract contains options to extend/terminate the lease
• Excluded the initial direct costs from the measurement of the right-of-use assets at the date of initial application
• Used a single discount rate to a portfolio of leases with reasonably similar characteristics
The impacts arising from the adoption of IFRS 16 as at 1 January 2019 are as follows:
IncreaseRMB’000
(Unaudited)
AssetsIncrease in right-of-use assets 108,485
Increase in total assets 108,485
LiabilitiesIncrease in lease liabilities 108,485
Increase in total liabilities 108,485
44
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
3. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued)
(a) Adoption of IFRS 16 (Continued)
The lease liabilities as at 1 January 2019 reconciled to the operating lease commitments as at 31 December 2018 are as follows:
RMB’000(Unaudited)
Operating lease commitments as at 31 December 2018 144,292Weighted average incremental borrowing rate as at 1 January 2019 6%Discounted operating lease commitments at 1 January 2019 115,861Less:
Commitments relating to short-term leases and those leases with a remaining lease term ending on or before 31 December 2019 (7,376)
Lease liabilities as at 1 January 2019 108,485
Summary of new accounting policiesThe accounting policy for leases as disclosed in the annual financial statements for the year ended 31 December 2018 is replaced with the following new accounting policies upon adoption of IFRS 16 from 1 January 2019:
Right-of-use assetsRight-of-use assets are recognised at the commencement date of the lease. Right-of-use assets are measured at cost, less any accumulated depreciation and any impairment losses, and adjusted for any remeasurement of lease liabilities. When the right-of-use assets relate to interests in leasehold land held as inventories, they are subsequently measured at the lower of cost and net realisable value in accordance with the Group’s policy for “properties under development” and “completed properties held for sale”. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of the estimated useful life and the lease term. When a right-of-use asset meets the definition of investment property, it is included in investment properties. The corresponding right-of-use asset is initially measured at cost, and subsequently measured at fair value, in accordance with the Group’s policy for “investment properties”.
45
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
3. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued)
(a) Adoption of IFRS 16 (Continued)
Summary of new accounting policies (Continued)Lease liabilitiesLease liabilities are recognised at the commencement date of the lease at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for termination of a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as an expense in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in future lease payments arising from change in an index or rate, a change in the lease term, a change in the in-substance fixed lease payments or a change in assessment to purchase the underlying asset.
46
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
3. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued)
(a) Adoption of IFRS 16 (Continued)
Amounts recognised in the interim condensed consolidated statements of financial position and profit or lossThe carrying amounts of the Group’s right-of-use assets and lease liabilities, and the movements during the period are as follows:
Right-of-use assets
BuildingsLease
liabilitiesRMB’000 RMB’000
As at 1 January 2019 108,485 108,485Additions 50,625 50,625Depreciation expense (30,863) —Interest expense — 3,254Payments — (45,022)
As at 30 June 2019 128,247 117,342
(b) Amendments to IAS 28 clarify that the scope exclusion of IFRS 9 only includes interests in an associate or joint venture to which the equity method is applied and does not include long-term interests that in substance form part of the net investment in the associate or joint venture, to which the equity method has not been applied. Therefore, an entity applies IFRS 9, rather than IAS 28, including the impairment requirements under IFRS 9, in accounting for such long-term interests. IAS 28 is then applied to the net investment, which includes the long-term interests, only in the context of recognising losses of an associate or joint venture and impairment of the net investment in the associate or joint venture. The Group assessed its business model for its long-term interests in associates and joint ventures upon adoption of the amendments on 1 January 2019 and concluded that the long-term interests in associates and joint ventures continue to be measured at amortised cost in accordance with IFRS 9. Accordingly, the amendments did not have any impact on the Group’s interim condensed consolidated financial information.
47
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
3. CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued)
(c) IFRIC 23 addresses the accounting for income taxes (current and deferred) when tax treatments involve uncertainty that affects the application of IAS 12 (often referred to as “uncertain tax positions”). The interpretation does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The interpretation specifically addresses (i) whether an entity considers uncertain tax treatments separately; (ii) the assumptions an entity makes about the examination of tax treatments by taxation authorities; (iii) how an entity determines taxable profits or tax losses, tax bases, unused tax losses, unused tax credits and tax rates; and (iv) how an entity considers changes in facts and circumstances. Upon adoption of the interpretation, the Group considered whether it has any uncertain tax positions. Based on the Group’s assessment, the interpretation did not have any significant impact on the Group’s interim condensed consolidated financial information.
4. OPERATING SEGMENT INFORMATION
Management monitors the operating results of the Group’s business which includes property development by project location for the purpose of making decisions about resource allocation and performance assessment, while no revenue, net profit or total assets from a single location exceeded 10% of the Group’s consolidated revenue, net profit or total assets, respectively. As all locations have similar economic characteristics with similar nature of property development and leasing and management, nature of the aforementioned business processes, type or class of customers for the aforementioned businesses and methods used to distribute the properties or provide the services, all locations were aggregated as one reportable operating segment.
Geographical information
No geographical information is presented as the Group’s revenue from the external customers is derived solely from its operation in Mainland China and no non-current assets of the Group are located outside Mainland China.
Information about major customers
No revenue from sales to a single customer or a Group of customers under common control accounted for 10% or more of the Group’s revenue for the six months ended 30 June 2019.
48
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
5. REVENUE, OTHER INCOME AND GAINS
An analysis of revenue, other income and gains is as follows:
For the six months ended 30 June
2019 2018RMB’000 RMB’000
(Unaudited) (Unaudited)
Revenue from contracts with customersSale of properties 20,413,499 9,621,368Property management services — 6,321Management consulting services 138,918 103,479
Revenue from other sourcesRental income 4,148 —
20,556,565 9,731,168
Represented by:
Revenue from the sale of properties:Recognised at a point in time 18,245,680 6,140,694
Recognised over time 2,167,819 3,480,674
Revenue from property management services:Recognised over time — 6,321
Revenue from management consulting services:Recognised over time 138,918 103,479
Revenue from other sources:Rental income 4,148 —
20,556,565 9,731,168
Other income and gains
Gain on disposal of subsidiaries 29,128 39,696Gain on disposal of associates — 787Forfeiture of deposits 11,595 6,860Government grants 9,438 5,336Others 11,982 3,306
62,143 55,985
49
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
6. PROFIT BEFORE TAX
The Group’s profit before tax is arrived at after charging:
For the six months ended 30 June
2019 2018RMB’000 RMB’000
(Unaudited) (Unaudited)
Cost of properties sold 15,387,074 7,002,971Impairment losses recognised for properties under development 31,952 37,931Depreciation of right-of-use assets 30,863 —Depreciation of items of property, plant and equipment 22,761 27,941Amortisation of intangible assets 161 130Auditor’s remuneration 3,800 2,888Employee benefit expense (including directors’
and chief executive’s remuneration):Wages and salaries 596,231 298,868Pension scheme contributions and social welfare 122,746 56,470
7. FINANCE COSTS
An analysis of finance costs is as follows:
For the six months ended 30 June
2019 2018RMB’000 RMB’000
(Unaudited) (Unaudited)
Interest on bank and other borrowings and lease liabilities 1,595,503 1,033,585Interest expense arising from revenue contracts 526,582 284,681
Total interest expense on financial liabilities not at fair value through profit or loss 2,122,085 1,318,266Less: Interest capitalised (1,871,232) (1,174,338 )
250,853 143,928
50
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
8. INCOME TAX
The Group is subject to income tax on an entity basis on profits arising in or derived from the tax jurisdictions in which members of the Group are domiciled and operate. Pursuant to the rules and regulations of the Cayman Islands, the Company and the Group’s subsidiaries incorporated in the Cayman Islands are not subject to any income tax. The Group’s subsidiary incorporated in Hong Kong is not liable for income tax as it did not have any assessable profits arising in Hong Kong for the six months ended 30 June 2019 and 2018.
Subsidiaries of the Group operating in Mainland China are subject to the PRC corporate income tax (“CIT”) with a tax rate of 25%.
PRC land appreciation tax (“LAT”) is levied at progressive rates ranging from 30% to 60% on the appreciation of land value, being the proceeds from the sale of properties less deductible expenditures including land costs, borrowing costs and other property development expenditures. The Group has estimated, made and included in taxation a provision for LAT according to the requirements set forth in the relevant Mainland China tax laws and regulations. The LAT provision is subject to the final review and approval by the local tax bureau.
For the six months ended 30 June
2019 2018RMB’000 RMB’000
(Unaudited) (Unaudited)
Current tax:CIT 1,299,710 914,808LAT 505,046 404,459
Deferred tax (510,116) (536,232 )
Total tax charge for the period 1,294,640 783,035
9. DIVIDENDS
On 22 August 2019, the board of directors declared the payment of an interim dividend of HK15.3 cents (equivalent to RMB13.8 cents) per share for the six months ended 30 June 2019 (for the six months ended 30 June 2018: Nil), totalling to approximately HK$548.0 million (equivalent to RMB492.9 million).
51
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
10. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT
The calculation of the basic earnings per share amount is based on the profit for the period attributable to ordinary equity holders of the parent of RMB1,204,108,000 (six months ended 30 June 2018: RMB 662,461,000), and the weighted average number of ordinary shares of 3,000,000,000 (six months ended 30 June 2018: 2,990,305,331) shares in issue during the period. The calculation of weighted average number of ordinary shares comprises the weighted average number of shares issued during the six months ended 30 June 2019 and 2018, and 2,990,305,325 ordinary shares to be issued pursuant to the capitalisation issue after the reporting period.
No adjustment has been made to the basic earnings per share amounts presented for the six months ended 30 June 2019 in respect of a dilution as the Group had no potential dilutive ordinary shares in issue during the period.
11. INVESTMENT PROPERTIES
UnderCompleted construction Total
RMB’000 RMB’000 RMB’000
Carrying amount at 1 January 2018 450,000 341,000 791,000
Additions — 65,929 65,929Transferred to completed investment properties — (15,600) (15,600)Transferred from investment properties under construction 15,600 — 15,600
Net gain from a fair value adjustment 3,400 68,571 71,971
Carrying amount at 31 December 2018 and 1 January 2019 (audited) 469,000 459,900 928,900
Additions — 75,307 75,307Transferred to completed investment properties — (158,300) (158,300)Transferred from investment properties under construction 158,300 — 158,300
Net gain from a fair value adjustment (2,712) 31,805 29,093
Carrying amount at 30 June 2019 (unaudited) 624,588 408,712 1,033,300
The Group’s investment properties as at 30 June 2019 and 31 December 2018 were valued by Jones Lang LaSalle Corporate Appraisal and Advisory Limited (“JLL”), an independent professionally qualified valuer, on an open market, existing use basis.
52
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
11. INVESTMENT PROPERTIES (Continued)
The fair value of completed commercial properties is determined using the income approach by taking into account the rental income of the properties derived from the existing leases and/or achievable in the existing market with due allowance for the reversionary income potential of the leases, which have been then capitalised to determine the fair value at an appropriate capitalisation rate. Where appropriate, reference to the comparable sales transactions as available in the relevant market has also been considered.
The fair value of commercial properties under construction is determined using the comparison method, with reference to comparable sales evidence as available in the relevant market to derive the fair value of the properties assuming they were completed and, where appropriate, after deducting the following items:
• Estimated construction cost and professional fees to be expensed to complete the properties that would be incurred by a market participant
• Estimated profit margin that a market participant would require to hold and develop the properties to completion
Investment properties included in Level 3 are all completed investment properties and investment properties under development. There were no transfers among Level 1, Level 2 and Level 3 during the reporting period.
As at 30 June 2019, certain of the Group’s investment properties with an aggregate carrying amount of approximately RMB351,000,000 (31 December 2018: RMB349,000,000) have been pledged to secure bank and other borrowings granted to the Group (note 15).
12. TRADE RECEIVABLES
An ageing analysis of the trade receivables as at the end of the reporting period, based on the invoice date and net of loss allowance, is as follows:
30 June 31 December2019 2018
RMB’000 RMB’000(Unaudited) (Audited)
Less than 1 year — 4,354
53
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
13. CASH AND CASH EQUIVALENTS, RESTRICTED CASH AND PLEDGED DEPOSITS
30 June 31 December2019 2018
RMB’000 RMB’000(Unaudited) (Audited)
Cash and bank balances 24,721,435 23,080,364Less: Restricted cash 12,961,477 7,892,069 Pledged deposits 1,695,586 636,777
Cash and cash equivalents 10,064,372 14,551,518
Denominated in RMB 10,053,670 14,551,510Denominated in HK$ 10,702 8
10,064,372 14,551,518
Pursuant to relevant regulations in the PRC, certain property development companies of the Group are required to place certain amounts of cash in designated bank accounts for specified use. As at 30 June 2019, such restricted cash amounted to RMB12,961,477,000 (31 December 2018: RMB7,892,069,000).
As at 30 June 2019, certain of the Group’s pledged deposits were pledged with aggregate carrying amounts of approximately RMB88,100,000 (31 December 2018: RMB21,500,000), have been pledged to secure bank and other borrowings granted to the Group (note 15).
As at 30 June 2019, bank deposits of RMB1,607,486,000 (31 December 2018: RMB615,277,000) were pledged as security for purchasers’ mortgage loans, or construction of projects, or pledged to banks as collateral for issuance of bank acceptance notes.
54
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
14. TRADE AND BILLS PAYABLES
An ageing analysis of the trade and bills payables as at the end of each of reporting period, based on the invoice date, is as follows:
30 June 31 December2019 2018
RMB’000 RMB’000(Unaudited) (Audited)
Less than 1 year 10,499,502 8,421,930 Over 1 year 91,878 76,365
10,591,380 8,498,295
55
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
15. INTEREST-BEARING BANK AND OTHER BORROWINGS
30 June 31 December2019 2018
RMB’000 RMB’000(Unaudited) (Audited)
CurrentBank loans — secured 1,033,900 490,000Bank loans — unsecured 227,000 232,000Other loans — secured 5,613,528 5,854,621Other loans — unsecured 720,460 673,201Current portion of long term
bank loans — secured 3,283,915 4,593,900Current portion of long term
other loans — secured 3,536,100 2,624,950Current portion of long term
other loans — unsecured 51,677 —
14,466,580 14,468,672
Non-currentBank loans — secured 8,860,414 5,211,318Bank loans — unsecured 1,150,000 820,000Other loans — secured 4,024,806 4,844,927Other loans — unsecured 300,400 1,660,000
14,335,620 12,536,245
28,802,200 27,004,917
56
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
15. INTEREST-BEARING BANK AND OTHER BORROWINGS (Continued)
30 June 31 December2019 2018
RMB’000 RMB’000(Unaudited) (Audited)
Analysed into:Bank loans repayable:
Within one year or on demand 4,544,815 5,315,900In the second year 5,131,891 3,979,318In the third to fifth years, inclusive 4,878,523 2,052,000
14,555,229 11,347,218
Other borrowings repayable: Within one year or on demand 9,921,765 9,152,772In the second year 4,001,829 6,104,927In the third to fifth years, inclusive 323,377 400,000
14,246,971 15,657,699
28,802,200 27,004,917
Certain of the Group’s bank and other borrowings are secured by the pledges of the following assets with carrying values at the end of reporting period as follows:
30 June 31 December2019 2018
RMB’000 RMB’000Notes (Unaudited) (Audited)
Properties under development 42,848,499 43,299,210
Investment properties 11 351,000 349,000
Pledged deposits 13 88,100 21,500
Management of the Company has assessed that the fair values of interest-bearing bank and other borrowings approximate to their carrying amounts largely due to the fact that such borrowings were made between the Group and independent third party financial institutions based on prevailing market interest rates.
57
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
15. INTEREST-BEARING BANK AND OTHER BORROWINGS (Continued)
i. The Group’s bank and other borrowings were guaranteed by its related parties (note 22(3)).
ii. As at 30 June 2019, 臨泉縣梁安置業有限公司 (“Linquan Liang’an Property Co., Ltd.”) has guaranteed certain of the bank and other borrowings
of up to RMB235,200,000 (31 December 2018: RMB355,900,000).
iii. As at 30 June 2019, 漣水瑞發置業有限公司 (“Lianshui Ruifa Property Co., Ltd.”) has guaranteed certain of the bank and other borrowings of up
to nil (31 December 2018: RMB140,000,000).
16. PROVISION FOR FINANCIAL GUARANTEE CONTRACTS
RMB’000
At 1 January 2018 —
Arising during the year 84,869
At 31 December 2018 and 1 January 2019 (audited) 84,869
Decreasing during the period (21,434)
At 30 June 2019 (unaudited) 63,435
The financial guarantee contracts represent guarantees given to banks and other financial institutions in connection with borrowings made to the Group’s joint ventures and associates. Details are set out in note 22 to the interim condensed consolidated financial information.
The Group does not provide financial guarantees except for limited circumstances. All guarantees are approved by the Chief Executive Officer.
The financial guarantee contracts are measured at the higher of the ECL allowance and the amount initially recognised less the cumulative amount of income recognised. The ECL allowance is measured by estimating the cash shortfalls, which are based on the expected payments to reimburse the holders (i.e., the banks) for a credit loss that it incurs less any amounts that the Group expects to receive from the debtor (i.e., the joint ventures and associates).
58
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
17. SHARE CAPITAL
Shares
30 June 31 December2019 2018HK$ HK$
(Unaudited) (Audited)
Authorised: 38,000,000 ordinary shares of HK$0.01 each 380,000 380,000
A summary of movements in the Company’s share capital is as follows:
Number of Shareshares in issue capital
RMB’000
At 1 January 2018 — —Issuance of new shares 9,694,675 85
At 31 December 2018 and 1 January 2019 (audited) 9,694,675 85Issuance of new shares — —
At 30 June 2019 (unaudited) 9,694,675 85
The Company was incorporated in the Cayman Islands on 22 March 2018 with authorised share capital of HK$380,000 divided into 38,000,000 shares of HK$0.01 at par value each. On the date of incorporation, 1 ordinary share of HK$0.01 was allotted by the Company to a subscriber, and was transferred to Liangzhong International Co., Ltd., a company controlled by Mr. Yang Jian, on 29 March 2018.
On 29 March 2018, 1 ordinary share of HK$0.01 was allotted and issued by the Company for cash to each of Liangyi International Co., Ltd. and Liangtai International Co., Ltd.
On 22 June 2018, 94 ordinary shares, 2 ordinary shares and 1 ordinary share were allotted and issued by the Company to Liangzhong International Co., Ltd., Liangyi International Co., Ltd., and Liangtai International Co., Ltd., respectively.
On 15 August 2018, 9,119,905 shares, 287,997 shares and 191,998 shares, which were all fully paid up at an aggregate consideration of US$140,265,600, were allotted and issued to Liangzhong International Co., Ltd., Liangyi International Co., Ltd. and Liangtai International Co., Ltd., respectively.
On 29 August 2018, 94,675 shares were allotted and issued to Abundant Talent Global Co., Ltd., and the issued share capital of the Company was HK$96,946.75.
59
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
18. BUSINESS COMBINATIONS
Acquisition of Shandong Mingyao Property Co., Ltd. (“Shandong Mingyao”)On 18 January 2019, the Group acquired a 54% equity interest in Shandong Mingyao, an unlisted company, with registered capital of RMB18,000,000. Shandong Mingyao is mainly engaged in property development and operation. The acquisition was part of the Group’s strategy to expand its market share of property development. The purchase consideration for the acquisition was in the form of cash, with RMB25,479,294 settled at the acquisition date.
The fair values of the identifiable assets and liabilities of the aforementioned subsidiary acquired as at the dates of acquisition were as follows:
For the six months ended30 June 2019
Fair valuerecognised
on acquisitionRMB’000
(Unaudited)
Properties under development 198,398Cash and cash equivalents 6,047Prepayments and other receivables 14,128Trade and bills payables (576)Other payables and accruals (188,755)Deferred tax liabilities (2,327)
Total identifiable net assets at fair value 26,915
Non-controlling interests measured at non-controlling interests’ proportionate share of the net assets (1,436)
Net assets acquired 25,479
Satisfied by cash 25,479
60
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
18. BUSINESS COMBINATIONS (Continued)
An analysis of the cash flows in respect of the acquisition of a subsidiary is as follows:
30 June 2019RMB’000
(Unaudited)
Cash consideration (25,479)Cash and cash equivalents acquired 6,047
Net outflow of cash and cash equivalents included in cash flows from investing activities (19,432)
19. DISPOSAL OF SUBSIDIARIES
(a) 杭州金悅企業管理有限公司 (“Hangzhou Jinyue Enterprise Management Co., Ltd.”)Pursuant to the share transfer agreement dated 15 February 2019, the Group disposed of its 47% equity interest in Hangzhou Jinyue Enterprise Management Co., Ltd. to 溫州城際投資管理有限公司 (“Wenzhou Chengji Capital Management Co., Ltd.”) for a consideration of RMB2,078,685.
(b) 宜城市禦融置業有限公司 (“Yicheng Yurong Property Co., Ltd.”)Pursuant to the share transfer agreement dated 26 April 2019, the Group disposed of its 35% equity interest in Yicheng Yurong Property Co., Ltd. to 湖北恒鑫力置業有限公司 (“Hubei Hengxinli Real Estate Co., Ltd.”) for a consideration of RMB28,917,808.
(c) 南寧梁悅置業有限公司 (“Nanning Liangyue Group Co., Ltd.”)Pursuant to the share transfer agreement dated 1 April 2019, the Group disposed of its 71% equity interest in Nanning Liangyue Group Co., Ltd. to 杭州金翰控股集團有限公司 (“Hangzhou Jinhan Holding Group Co., Ltd.”) and 寧波梅山保稅港區桂悅投資合夥企業(有限合夥)(“Ningbo Meishan Bonded Port Area Guiyue Investment Partnership (Limited Partnership)”), for a consideration of nil.
(d) 揚州梁瑞置業有限公司 (“Yangzhou Liangrui Property Co., Ltd.”)Pursuant to the share transfer agreement dated 29 January 2019, the Group disposed of its 67% equity interest in Yangzhou Liangrui Property Co. Ltd. to 南京正惠置業有限公司 (“Nanjing Zhenghui Real Estate Co., Ltd.”) and 恒通建設集團有限公司 (“Hengtong Construction Group Co., Ltd.”) for a consideration of nil.
61
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
19. DISPOSAL OF SUBSIDIARIES (Continued)
(e) 蘇州恒信置業有限公司 (“Suzhou Hengxin Property Co., Ltd.”)Pursuant to the share transfer agreement dated 28 April 2019, the Group disposed of its 50% equity interest in Suzhou Hengxin Property Co Ltd. to 蘇州新力創悅房地產有限公司 (“Suzhou Xinli Chuangyue Real Estate Co., Ltd.”) for a consideration of RMB5,000,000.
(f) 贛州瑞禦置業有限公司 (“Ganzhou Ruiyu Property Co. Ltd.”)Pursuant to the share transfer agreement dated 30 May 2019, the Group disposed of its 67% equity interest in Ganzhou Ruiyu Property Co Ltd. to 池州梁鑫企業管理諮詢服務有限公司 (“Chizhou Liangxin Enterprise Management Consulting Service Co., Ltd.”), 吉安市宏盛企業管理有限公司 (“Ji’an Hongsheng Enterprise Management Co., Ltd.”) and 萍鄉中梁榮房地產信息諮詢合夥企業(有限合夥)(“Pingxiang Zhonglianrong Real Estate Information Consulting Partnership (Limited Partnership)”) for a consideration of nil.
The carrying values of the assets and liabilities on the dates of disposal were as follows:
For the six months ended30 June 2019
RMB’000(Unaudited)
Net assets disposed of:Property, plant and equipment 41Properties under development 803,592Tax recoverable 12,274Cash and cash equivalents 359,180Investments in associates 420,000Prepayments and other receivables 785,424Trade and bills payables (8,592)Contract liabilities (760,093)Interest-bearing bank and other borrowings (263,500)Other payables and accruals (1,341,458)
6,868
Gain on disposal of subsidiaries 29,128
Satisfied by Cash 35,996
62
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
19. DISPOSAL OF SUBSIDIARIES (Continued)
An analysis of the net outflow of cash and cash equivalents in respect of the disposal of the subsidiaries is as follows:
For the six months ended30 June 2019
RMB’000(Unaudited)
Cash received 35,996
Cash and cash equivalents disposed of (359,180)
Net outflow of cash and cash equivalents in respect of the disposal of subsidiaries (323,184)
The directors of the Company consider that not all subsidiaries disposed of were significant to the Group and thus the individual financial information of some subsidiaries on the disposal date was not disclosed.
20. CONTINGENT LIABILITIES
At the end of reporting period, contingent liabilities not provided for in the condensed consolidated financial information were as follows:
30 June 31 December2019 2018
RMB’000 RMB’000Notes (Unaudited) (Audited)
Guarantees given to banks in connection with facilities granted to purchasers of the Group’s properties (1) 40,261,583 28,897,294
Guarantees given to banks in connection with facilities granted to related companies (2) 8,326,894 6,594,169
63
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
20. CONTINGENT LIABILITIES (Continued)
(1) The Group provided guarantees in respect of mortgage facilities granted by certain banks to the purchasers of the Group’s completed properties held for sale. Pursuant to the terms of the guarantee arrangements, in case of default on mortgage payments by the purchasers, the Group is responsible to repay the outstanding mortgage principals together with any accrued interest and penalties owed by the defaulted purchasers to those banks.
Under the above arrangement, the related properties were pledged to the banks as collateral for the mortgage loans, upon default on mortgage repayments by these purchasers, the banks are entitled to take over the legal titles and will realise the pledged properties through open auction.
The Group’s guarantee period starts from the dates of grant of the relevant mortgage loans and ends upon the issuance and registration of property ownership certificates to the purchasers, which will generally be available within half a year to two years after the purchasers take possession of the relevant properties.
The Group did not incur any material losses during the reporting period in respect of the guarantees provided for mortgage facilities granted to purchasers of the Group’s completed properties held for sale. The directors of the Company considered that in case of default on payments, the net realisable value of the related properties would be sufficient to repay the outstanding mortgage loans together with any accrued interest and penalty, and therefore no provision has been made in connection with the guarantees.
(2) The Group provided guarantees to banks and other institutions in connection with borrowings made to the related companies. As of 30 June 2019, an allowance of RMB63,435,000 (31 December 2018: RMB84,869,000) was provided as a result of the guarantees provided to the related companies.
21. COMMITMENTS
The Group had the following capital commitments at the end of the reporting period:
30 June 31 December2019 2018
RMB’000 RMB’000(Unaudited) (Audited)
Contracted, but not provided for: Property development activities 41,927,106 40,652,123Acquisition of land use rights 4,809,085 1,930,992Capital contributions payable to joint ventures and associates 2,086,318 1,464,253
48,822,509 44,047,368
64
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
22. RELATED PARTY TRANSACTIONS
(1) Significant related party transactions
The following transactions were carried out with related parties during the reporting period:
For the six months ended 30 June
2019 2018RMB’000 RMB’000
(Unaudited) (Unaudited)
Advance to related companies:Companies controlled by certain directors and/or
their close family members — 671,286Joint ventures and associates 4,155,977 2,666,666Companies controlled by the ultimate controlling shareholders 23,753 14,512,982
Repayment of advances to related companies:Companies controlled by certain directors and/or
their close family members 57,655 126,627Joint ventures and associates 5,839,174 3,525,437Companies controlled by the ultimate controlling shareholders 246,644 17,129,559
Advance from related companies:Companies controlled by certain directors and/or
their close family members — 285,294Joint ventures and associates 5,827,078 2,211,410Companies controlled by the ultimate controlling shareholders — 1,998,146
Repayment of advances from related companies:Companies controlled by certain directors and/or
their close family members 119,458 82,588Joint ventures and associates 3,360,163 1,099,735Companies controlled by the ultimate controlling shareholders 70,778 2,227,404
Property management services to joint ventures and associates (Note) — 1,199
Management consulting services to joint ventures and associates (Note) 86,607 43,479
Interest income from companies controlled by certain directors and/or their close family members (Note) — 87,395
Finance costs from a company significantly impacted by certain directors (Note) 3,750 9,552
Property management services from companies controlled by the ultimate controlling shareholders (Note) 87,028 31,894
Note: These transactions were carried out in accordance with the terms and conditions mutually agreed by the parties incurred.
65
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
22. RELATED PARTY TRANSACTIONS (Continued)
(2) Disposal of subsidiaries
For the six months ended 30 June
2019 2018RMB’000 RMB’000
(Unaudited) (Unaudited)
Consideration of disposal of subsidiaries — 273,000
(3) Other transactions with related parties
i. As at 30 June 2019, the Controlling Shareholders and Suzhou Industrial Park Huacheng Real Estate Development Limited have jointly guaranteed certain of the bank and other borrowings of up to RMB444,100,000 (31 December 2018: RMB5,262,550,000).
ii. As at 30 June 2019, the Controlling Shareholders has guaranteed certain of the bank and other borrowings of up to RMB665,500,000 (31 December 2018: RMB2,320,339,000).
iii. As at 30 June 2019, Suzhou Industrial Park Huacheng Real Estate Development Limited has guaranteed certain of the bank and other borrowings of up to RMB535,850,000 (31 December 2018: RMB2,055,880,000).
iv. Jiangsu Zhongquanhe Construction Co., Ltd. provided a loan to the Group for real estate development with a term of two years and an interest rate of 7.45% per annum. As at 30 June 2019, the outstanding balance of the aforementioned loan amounted to nil (31 December 2018: RMB138,600,000). This loan was included in “Interest-bearing bank and other borrowings” in the consolidated statements of financial position of the Group.
v. As at 30 June 2019, Rui’an Yuetang Property Co., Ltd. has guaranteed certain of the bank and other borrowings of up to nil (31 December 2018: RMB204,000,000).
vi. As at 30 June 2019, Shucheng Wenzhu Real Estate Co., Ltd. has guaranteed certain of the bank and other borrowings of up to RMB48,700,000 (31 December 2018: RMB70,000,000).
vii. As at 30 June 2019, Deqing Jinhao Property Co., Ltd. has guaranteed certain of the bank and other borrowings of up to RMB323,377,000 (31 December 2018: RMB400,000,000).
viii. As at 30 June 2019, the Group has guaranteed certain of the bank and other borrowings made to its joint ventures and associates up to RMB 8,326,894,000 (31 December 2018: RMB6,594,169,000).
66
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
22. RELATED PARTY TRANSACTIONS (Continued)
(4) Outstanding balances with related parties
30 June 31 December2019 2018
RMB’000 RMB’000(Unaudited) (Audited)
Due from related companies:Companies controlled by certain directors and/or
their close family members — 57,655Joint ventures and associates 7,877,700 9,560,897Companies controlled by the ultimate controlling shareholders — 222,891
Due to related companies:Companies controlled by certain directors and/or
their close family members — 119,458Joint ventures and associates 9,695,817 7,228,902Companies controlled by the ultimate controlling shareholders — 70,778
Balances with the above related parties were non-trade, unsecured, non-interest-bearing and repayable on demand.
(5) Compensation of key management personnel of the Group
For the six months ended 30 June
2019 2018RMB’000 RMB’000
(Unaudited) (Unaudited)
Short-term employee benefits 18,739 17,979Pension scheme contributions 335 310
Total compensation paid to key management personnel 19,074 18,289
67
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
23. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS
The carrying amounts and fair values of the Group’s financial instruments as at the end of reporting period, other than those with carrying amounts that reasonably approximate to fair values, are as follows:
Carrying amounts Fair values30 June 31 December 30 June 31 December
2019 2018 2019 2018RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited) (Audited) (Unaudited) (Audited)
Financial assetsFinancial assets at fair value through
profit or loss (“FVPL”) 233,967 228,757 233,967 228,757
Financial liabilitiesInterest-bearing bank and other borrowings 28,802,200 27,004,917 28,818,628 26,991,997
Other financial liabilities 54,124 59,284 54,124 59,284
Provision for financial guarantee contracts 63,435 84,869 63,435 84,869
Management has assessed that the fair values of cash and cash equivalents, pledged deposits, restricted cash, amounts due from related companies, financial assets included in prepayments and other receivables, trade and bills payables, financial liabilities included in other payables and accruals and amounts due to related companies approximate to their carrying amounts largely due to the short term maturities of these instruments.
The fair values of the financial assets and liabilities are included at the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values.
For the fair values of the financial assets at FVPL, management has estimated by discounting the expected future cash flows using rates currently available for instruments with similar terms, credit risk and remaining maturities. The fair value measurement of the financial assets at FVPL is categorised within level 3 of the fair value hierarchy.
For the fair values of other financial liabilities, management has estimated by discounting the expected future cash flows using expected return rates for the underlying assets in order to estimate the cash outflow amounts to settle the liability. The fair value measurement of the financial liability is categorised within level 3 of the fair value hierarchy.
68
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
23. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (Continued)
The Group’s corporate finance team headed by the group financial controller is responsible for determining the policies and procedures for the fair value measurement of financial instruments. The corporate finance team reports directly to the group financial controller and the audit committee. At each reporting date, the corporate finance team analyses the movements in the values of financial instruments and determines the major inputs applied in the valuation. The valuation is reviewed and approved by the group financial controller. The valuation process and results are discussed with the board of directors twice a year for financial reportings.
Below is a summary of significant unobservable inputs to the valuation of financial instruments together with a quantitative sensitivity analysis as at 30 June 2019 and 31 December 2018:
Valuationtechnique
Significantunobservable input Range Sensitivity of fair value to the input
Other financial liabilities
Discounted cash flow method
Incremental borrowing cost
30 June 2019: 8.2%–12.5%
1% increase/decrease in incremental borrowing cost would result in a decrease/increase in fair value by RMB50,000/RMB50,000
2018: 8.2%–12.5%
1% increase/decrease in incremental borrowing cost would result in a decrease/increase in fair value by RMB78,000/RMB78,000
Expected rate of return per annum
30 June 2019: 9.87%–14.96%
1% increase/decrease in expected rate of return per annum would result in an increase/decrease in fair value by RMB50,000/RMB50,000
2018: 9.87%–14.96%
1% increase/decrease in expected rate of return per annum would result in an increase/decrease in fair value by RMB48,000/RMB48,000
69
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
23. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (Continued)
Below is a summary of significant unobservable inputs to the valuation of financial instruments together with a quantitative sensitivity analysis as at 30 June 2019 and 31 December 2018: (continued)
Valuationtechnique
Significantunobservable input Range Sensitivity of fair value to the input
Financial assets at FVPL
Discounted cash flow method
Expected rate of return per annum
30 June 2019: 8.5%–8.78%
1% increase/decrease in expected interest rate per annum would result in an increase/decrease in fair value by RMB6,000/RMB6,000
2018: 8.78%
1% increase/decrease in expected interest rate per annum would result in an increase/decrease in fair value by RMB2,000/RMB2,000
Discount rate 30 June 2019: 8.5%–8.78%
1% increase/decrease in discount rate would result in a decrease/increase in fair value by RMB1,000/RMB1,000
2018: 3.17%
1% increase/decrease in discount rate would result in a decrease/increase in fair value by RMB1,000/RMB1,000
Provision for financial guarantee contracts
Expected credit loss model
Recovery rate 30 June 2019: 38.3%–39.6%
1% increase/decrease in recovery rate would result in a decrease/increase in fair value by RMB182,808/RMB182,808
2018: 38.0%–39.5%
1% increase/decrease in recovery rate would result in a decrease/increase in fair value by RMB351,003/RMB351,003
Discount rate 30 June 2019: 1.17%–3.93%
1% increase/decrease in discount rate would result in a decrease/increase in fair value by RMB11,821/RMB11,830
2018: 2.39%–2.87%
1% increase/decrease in discount rate would result in a decrease/increase in fair value by RMB26,422/RMB26,444
70
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
23. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (Continued)
Fair value hierarchy
The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments:
Assets measured at fair value:As at 30 June 2019
Fair value measurement using
Quoted pricesin activemarkets(Level 1)
Significantobservable
inputs(Level 2)
Significantunobservable
inputs(Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Financial assets at FVPL — — 233,967 233,967
As at 31 December 2018
Fair value measurement using
Quoted pricesin activemarkets(Level 1)
Significantobservable
inputs(Level 2)
Significantunobservable
inputs(Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000(Audited) (Audited) (Audited) (Audited)
Financial assets at FVPL — — 228,757 228,757
The movements in fair value measurement within Level 3 during the period are as follows:
30 June 2019
31 December 2018
RMB’000 RMB’000(Unaudited) (Audited)
Financial assets at FVPL— wealth management products at fair value:At 1 January 228,757 297,171Acquisition of financial assets at fair value 5,000 2,500Disposal of financial assets at fair value — (66,875)Fair value changes 210 (4,039)
At the end of the reporting period 233,967 228,757
71
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
23. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (Continued)
Fair value hierarchy (Continued)
Liabilities measured at fair value:As at 30 June 2019
Fair value measurement using
Quoted pricesin activemarkets(Level 1)
Significantobservable
inputs(Level 2)
Significantunobservable
inputs(Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Other financial liabilities — — 54,124 54,124Provision for financial guarantee contracts — — 63,435 63,435
— — 117,559 117,559
As at 31 December 2018
Fair value measurement using
Quoted pricesin activemarkets(Level 1)
Significantobservable
inputs(Level 2)
Significantunobservable
inputs(Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000(Audited) (Audited) (Audited) (Audited)
Other financial liabilities — — 59,284 59,284Provision for financial guarantee contracts — — 84,869 84,869
— — 144,153 144,153
During the reporting period, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3 for both financial assets and liabilities (six months ended 30 June 2018: Nil).
72
For the six months ended 30 June 2019
ZHONGLIANG HOLDINGS GROUP COMPANY LIMITED INTERIM REPORT 2019
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
24. EVENTS AFTER REPORTING PERIOD
(1) In connection with the Listing of the shares of the Company on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), 530,000,000 new ordinary shares with a nominal value of HK$0.01 each were issued at a price of HK$5.55 per ordinary share for a total cash consideration of HK$ 2,941,500,000, before deducting underwriting fees, commissions and related expenses. In addition, 2,990,305,325 shares were issued by way of capitalisation. Dealings in the shares of the Company on the Stock Exchange commenced on 16 July 2019.
(2) On 5 August 2019, the over-allotment option has been partially exercised and the Company allotted and 51,791,500 additional shares were issued at HK$5.55 per share on 7 August 2019.
(3) As of 16 July 2019, the guarantees provided by the Controlling Shareholders and Suzhou Industrial Park Huacheng Real Estate Development Limited have been released.
25. APPROVAL OF THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The interim condensed consolidated financial information was approved and authorised for issue by the board of directors on 22 August 2019.